Online business valuation

U

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I have received an offer for an ecommerce business of mine but the potential buyer wants me to put a price on it. I would have prefered them to just make an offer but they are insisting I set the price. While I have developed all the code etc. (months of work) for the business I have yet to try and market it so I've no clients.
I understand that no clients mean more risk for this person but how would that reflect on the price I should ask for?
I am reluctant to part with it for just a few hundred or even thousand but perhaps thats all it worth...
 
A very interesting problem.

From a financial point of view, your business might be worth nothing or it might be worth millions!

From a personal satisfaction point of view, you would probably gain a lot from implementing your idea in the real World. You may have a big emotional investment in this project. But you might also be very disappointed if it does not succeed. It might succeed better under the ownership of the other people.

If you sell it today, what are your career options? Can you set up a similar project tomorrow. You may be in a better postion to do so, now that you are richer. Maybe the acquiring company needs your continued input into the project?

Can you retain a stake in the project, so that you will benefit if it does become very successful commercially?

If one company is interested, maybe there are other possible buyers and you could get an auction going.

Have you a financial plan? An estimate of market size? What profit would the company make? As a rough guide, ten times the potential profits would be starting price.

Post some more details if possible.

Brendan
 
Career isn't a problem as I already have a fulltime IT job and everything relating to this business was done in my spare time.
The interested party wants to buy everything and I would only be required for the handover.
Profits from business could be huge but with my sales and marketing skills they probably won't be. This is part of the reason I feel I should sell up.

Not sure whether I'd be more disappointed seeing this business fail under my guidence or selling it for a few hundred and watching it prosper...
 
Unreg

Why not work out what your hourly rate is? Then multiply that by the number of hours it has taken you to develop the project, including R%D, thinking about the idea etc. etc. This will at least give a monetary value to the time you have already spent. Then add an extra % to cover lost of future earnings from the project.

As Brendan mentioned why not approach other companies similar to the one interested in your product and see if they would make a bid. Alternatively price your solution and ask for a % of profits for a set period of time?

C
 
Work out how much it would cost the buyer to build the ecommerce site themselves using standard I.T. contract rates. Your price should be at about that level, plus a premium as it is ready to go.

Other alternatives include:

Selling a majority percentage of the business, thus allowing you to wet your beak on any future profits

You could license the software to the buyer thus making it cheaper for the buyer and allowing you more flexibility in the future.
 
Fair play to you!

I started building my own online business 5 years ago. And I'm so glad I never sold out. I would love to see what you have come up.

Can you pm the details of the website, or post more details.

You never know I might make an offer or help finance you to work on it full-time. It can't hurt to let us know.
 
^^^ Statcounter.com. Is that your website?
If so, you appear to have better search engine penetration than Microsoft!
 
Well you seem to be going the right way about it! Give it another couple of years.
 
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