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Getting the Most Multipliers Out of Your E-Commerce Business

Posted by Leo Decker in Articles

Have you ever wondered what your e-commerce website is worth? Have you put all of your blood, sweat, and tears into growing the business but now are ready to turn it for a profit? Have you ever considered the type of changes that you might be able to make to your website, in order to increase its value?

If you own an e-commerce company, chances are that at least some point in time, you’ve contemplated selling your business or at least interested in learning how much the website might be worth.

What Goes into The Backend of Developing an E-Commerce Business?

An e-commerce owner will put a great deal of work into developing a website, increasing products, growing sales and generating quality search engine traffic. When it comes time to sell the website, it is a big mistake to assume that if you build it, they will come.

Website owners may have a very difficult time selling their e-commerce company if the website itself is not running as efficiently as it could be. It can be very difficult to increase the traffic to your e-commerce store. Having a solid pay-per-click strategy and good search engine optimization strategy in place, can help to generate traffic very quickly, which will also increase sales and profits.

Adding more structure and staff can also assist in terms of getting more sales. E-commerce websites such as many other businesses are sold on a multiple of the seller’s discretionary earnings. Here at Website Closers, we will sit down with you during the initial consultation to tell you what you might be able to expect from the SDE or cash flow multipliers.

Increasing Your Multiplier Pre-Sale

A website owner can easily increase their multiplier, first of all, by working with an experienced online business broker who knows the lay of the land and who can establish a compelling offer in the marketplace. Other steps that a business owner might take to increase their e-commerce SDE include:

  • Automating the website so that it can be run from anywhere in the world, as this becomes an extremely appealing offer to prospective buyers.
  • Finding vendors who are willing to drop ship a product for you, thereby eliminating or limiting inventory.
  • Using an automated system that relies on very few staff members in order to be successful.
  • Having a clean set of financials backed up a valuation process. When this information can be verified by a buyer, there is a much greater chance that the buyer will be interested in purchasing the company.

Selling a website is quite different from selling a brick and mortar company. Since there are so few tangible assets that will give collateral for a bank loan, it is important that you do all of your homework in advance to be able to show that the purchase of the business is a solid choice for your prospective buyer.

Having an online business broker who can help connect you with the right online business buyer will make a big difference in your ability to sell your company quickly and effectively.