I've been running an e-commerce business for 3 years and getting good sales from Amazon, but I've been investing every penny I've earned on more inventory. I think it might be time to get paid soon and use the funds to start a new business and make it bigger. But I don't even know where to start to find out what my business is potentially worth. And I don't want to hear from business brokers giving me a sales pitch disguised as a free valuation, at least not until I've decided.
A good starting point for determining the valuation is triple your annual earnings. That said, you may find a 1-2 fold or lower variation depending on the type of product (s), the category or categories you sell in, the total number of SKUs, and so on. If you're just looking for a general idea, most FBA businesses sell about 2.5 to 3.5 times the SDE, and SDE stands for Seller Discretionary Profit or your Net Revenue plus any discretionary or one-off expenses. Also, when you talk to a good broker, they won't give you a sales campaign or convince you to sell ahead of time.
Many (most) will, but there are still some decent people left in the industry who are happy to suggest what is best for you, not what makes them a quick commission. I will not repeat the same information that previous experts have already provided. I'll add that to be accepted into your markets, your business must have at least 12 consecutive months of sales and show a steady income for those months or a growing income. The more categories you haven't chosen will add more trust and value to your business.
The more successful ASINs, the better your feedback. Also remember that the business you sell must allow the new owner to continue to purchase the products as you do now, and the buyer will most likely ask you to sign a non-compete agreement that prevents you from selling in the same niche or selling on Amazon for several years. Access 20,000+ startup experts, 650+ masterclass videos, 1000+ in-depth guides, and all the software tools you need to launch and grow quickly. The age factor contributes to the monthly multiple not because older companies automatically qualify for higher selling prices, but because of the time it gives the seller.
The goal of FBA Guys is to help Amazon sellers launch, grow, and ultimately leave their businesses by providing access to high-quality information, resources, and recommendations. First-time sellers won't know how to negotiate with buyers or really understand how much their business is worth. Some companies have accumulated additional assets, and the potential of those assets is a big draw for buyers. Or, since the product is already made and has been proven to be a winner, shoppers will often expand the business by taking the products to other markets such as Walmart, Home Depot, Houzz or Jet.
That's why it's natural that, when preparing to sell your business, you focus a lot on the asking price, since you want it to sell for the price you think is worth it. If she understands that the person is selling the business and you have contacted them, then that's okay because they're in the know. For average Amazon Seller Support, when you notify them to sell the business, they'll automatically assume that you mean you're selling the account. The longer the financial history of a company, the more established it will be and, consequently, the more it will be worth.
As I mentioned earlier, you can wait a few months and see another 15 percent increase in average sales prices for FBA businesses. There are many external influences that could be a serious blow to your business, including changes from Amazon and Google, changes in the industry, and entry of competitors into the market. I have some ideas about it, which I will include below, but first I wanted to give you some general advice, whether you are waiting to sell your business or decide to launch directly and list your business with us in the short term. If a seller doesn't want to pay for my company's valuation, they don't see any value in the information and skills needed to be a successful sales agent.
Typically, these are people with a background in finance or engineering who see the value of owning a small business and would rather work three hours a week and spend time with their family than pursue their current career. . .
Leave a Comment