A business worth can go from a few bucks to millions of dollar. The actual value of business all depends on individual estimation. Another entrepreneur can sell a business sold at $1000 at $20,000. That’s a result of marketing and sales strategy. Come to think of it, if you’re to sell your business today, what would be its worth? What metrics would the evaluation process be based on? Maybe annual sales, business age, or cost of operation. That’s your guess, right? Why not read further to confirm if your guess is as good as ours.
From our previous sales data, we’ve noticed that online business valuation is centered around some key variables. These include:
This factor is concerned with all monetary record of your business. The length of time your business has been in operation, and its financial history has lots to say about your business value. Specifically, the business valuation should be centered around its gross and net income for the last three years. You also need to consider the stability of your business earning power before valuing what price it will sell.
This is another important metric that determines the price of your online business. Is your business website traffic trending? How about the search engine ranking? Is the ranking too tight for competitors to out space? The percentage of traffic coming from search also determine how much you will be getting for the site. You also need to consider the sustainability of the site referral method. If all these measures are in place, your site value must weight a lot of dollars.
This centers on the processes involved in offering services to clients. As a business owner, the number of time you spend in realizing profits determines if the business will be sold at a higher or lower price. When there are many technical processes, a buyer may not seek interest in buying the businesses. But with lesser technical processes, price of the site can be expensive. Also, if your business belongs to a fast demanding niche, the value of your business can also be increased and also expensive.
The competitive nature of your online business niche tells a lot on its value. High competitiveness means the niche is trending and demands for its product or service is high. Investor loves buying such kind of online business. They believe the business will generate a quick return for them, and the business future is bright. Hence, the reasons for a higher valuation. As a business seller, you must put this factor into consideration. Is the online business niche competition low, moderate, or high? The relevant answers to such question should guide your valuation process.
This is another important metric you shouldn’t overlook while valuing your business. The number of clients acquired overtime, client lifetime value, and churn rate are some of the key variables to consider when flipping your online business. Means of acquiring the clients are also vital here. During the flipping stage, the prior buyer would want to know if a particular channel is least expensive for acquiring clients. The more cost-effective customer acquisition process is, the better its value.
TAKE-AWAY: Valuing your online business can be somehow tedious. It takes time and courage to flip an online business at the desired price. One best way of valuing a business is to create a scale system whereby each point is grade in monetary terms. The higher the point, the better its monetary value. Doing that helps you come up with a fair estimate of your site.