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The In-Depth Guide to Selling Your eCommerce Business
This article is 7000 words long, so why not grab a coffee, put your feet up and get comfortable before diving in Please like, Tweet and share if you find it informative.
Selling their profitable business is often the goal of most entrepreneurs.
Unfortunately, it can be an extremely long process that can have many obstacles and is akin to riding an emotional rollercoaster. Selling a profitable business is definitely a decision that shouldn’t be taken lightly.
Most of what’s written below will apply to selling well-established businesses outside of the eCommerce realm, as well.
While we’ve tried our hardest, it can be nearly impossible to cover every different area of getting the deal and closing it quickly and effectively. However, this guide was created to help you understand exactly what goes into the process of selling a successful online business.
Understanding How to Value Your Business
Most times, businesses that are generating less than $1,000,000 in yearly earnings are going to sell using a valuation method referred to as Seller’s Discretionary Earnings — or SDE.
To calculate your SDE, combine your pre-tax profits and your own compensation.
To give you an example, if your business generated $200,000 in profits last year and you are paying yourself a $75,000 salary, the SDE of your company would be $200,000 plus $75,000, or a total of $275,000.
SDE is a way for you to calculate how much the business is worth to you as the owner.
When buyers are trying to figure out how much your business is worth to them, they are typically going to use a multiple of your SDE. In most cases, the multiple will range from a 1.5x to 3x multiple of your SDE value.
Finding the multiple is reliant on a few key factors:
Read More......Ultimate Guide to selling your business
- The growth and performance of your business over time.
- The size of your market and future growth potential.
- The ability to defend your business model.
- How you’ve organized and structured the business.
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