Buying an Existing Yahoo! Online Store

[robbbailey]

Does anyone have any experience in buying a business that's purely and online store?

Any info on estimate of business worth based on previous sales, etc. would be greatly appreciated.

Maybe Scott SF can help me out with this one since he's owned some stores previously.

Any advice/input? I'm extremely cautious about doing this for some reason... Just seems like there is way too much left for unknowns to really look at profitability, etc.

[scottsanfilippo]

Hi Robb - nice to see your smilin' face in the forums!!

There are a couple of different ways people will "value" a business depending on the situation. They can look at the sale price based on EBIDA or a multiplier of sales, or if it's a strategic buy the price can be much higher than the business is worth. There is no set formula for setting a sale price on a business since it can vary so greatly due to many circumstances including market, the buyer and of course, the seller's desire to sell.

When we sold our pet division it was a strategic buy since the new owners wanted to expand their market presence in the area which we dominated. Unfortunately, I can't use the numbers involved in that sale as an example because of a confidentiality agreement in place.

[robbbailey]

That makes sense. Thanks Scott!

Much appreciated. And nice self-portrait BTW!!!!!

[Jan]

Robb-I met you at Boot Camp-you folded those Google shirts so nicely!

I sold my store a few years ago. If you have some questions about it, send me a PM and I'll try and answer what I can.

[spytown]

its really History that you need to look at.. that being solid history. for example, if an online store is trying to sell, dont just look at the last 3 months of sales.. that could be "fudged"..you need to look atleast 1 year history of continuous growth, or same volume, or trends (for holiday seasons) , as well find out all costs they have been spending, such as adwords, clicks, etc.. and do the math!