“What’s my business worth?” is really three questions:
What’s my profit? What multiple does that profit command? And how do I improve both?
Here are 15 FAQs that answer all three.
Quick Answers (Top 5 Most Common Questions)
1. What’s the basic formula?
Annual SDE × Multiple = Value. For most stores, the multiple is 2.5x to 3.5x.
2. How do I find my SDE?
Look at your net profit. Add back owner salary, one-time expenses, and personal perks. The total is SDE.
3. What multiple should I expect?
Depends on risk. Predictable businesses (high LTV, diverse traffic) get 3.0x-3.5x. Risky businesses (single-channel, low LTV) get 2.0x-2.5x.
4. Can I increase my multiple?
Yes. Boost LTV, diversify traffic, document operations, and reduce owner dependence. These moves directly increase your multiple.
5. Where can I get help?
Get a free valuation here. It’s the quickest way to get a realistic number.
Advanced Valuation Questions
6. How does LTV work in valuation?
LTV measures how much a customer is worth over their lifetime. High LTV means repeat purchases and predictable revenue. Buyers pay premiums for that.
7. What’s a good LTV?
Above $200 with a 3:1 LTV:CAC ratio. That shows healthy unit economics and a sustainable business model.
8. How does traffic quality affect value?
Owned traffic (email, organic) is more valuable than rented traffic (paid ads). Owned traffic is sustainable and doesn’t disappear when ad costs rise.
9. What about my email list?
An engaged email list is worth $1-$3 per subscriber. If your list drives 20%+ of revenue, it’s a major asset.
10. Does my niche matter?
Yes. “Boring” niches (consumables, supplements, pet products) with high repeat purchase rates are hot. Trendy niches with one-time buyers are discounted.
Timing & Process Questions
11. How long does valuation take?
A quick estimate takes minutes. A professional valuation takes 1-2 weeks. Due diligence adds 2-4 weeks after an offer.
12. What’s the biggest timing mistake?
Selling during a decline. Buyers notice downward trends and lowball. Sell when revenue is growing.
13. Should I wait for a better market?
Don’t time the market. Time your business. If your metrics are strong, sell. If they’re weak, fix them first.
Risk & Red Flags
14. What are the most common deal-killers?
- Financial mismatches: Numbers that don’t add up.
- Platform violations: Amazon flags or ad bans.
- Hidden liabilities: Undisclosed debt or legal issues.
- Owner dependence: No team, no SOPs.
- Concentration risk: One product, one channel, one customer.
15. How do I prevent deal-killers?
Be proactive. Fix issues before listing. Document everything. Be transparent. Buyers pay more for businesses that are clean and honest.
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