HTML Help: Determing a Website's Value

A very simple formula is that you subtract the annual cost of running the business from the annual profits, and multiply the net profit by a factor of two to three to arrive at a fair sales price.

That formula assumes there is no outstanding debt, no pending law suits, and no equipment or inventory being transferred. Obviously, when you start introducing these and other factors, the formula and the value of the business can change quite a bit.

Other things that may figure into the sale price of an online business may be the amount of traffic the site receives, a fair price for the good will you've already built up, and an added value for any brand names, trademarks, copyrighted material, and products you've developed that are to be part of the sale.

If the potential buyer requests a no-compete clause, meaning you can't work in the same field for a specified amount of time, then that can add to the sales price too.

Having a business plan covering 2-3 years that shows the potential buyer your vision for taking the business to new levels of profitability can also add to the bottom line.

You'll need to do somee research, don't just use what I've written to determine a sales price. I've not sold a business before, this is what came to mind, but I could be leaving out some important consideratons. You may want to consult a business appraiser and have a professional estimate made to avoid selling yourself short.

On the other hand, if you've got a price in mind you'd be happy to sell at, and a buyer is willing to pay it, perhaps it's not necessary to complicate things if you just want out. Sometimes the added stress just isn't worth niggling for ever dollar you can get.

In the end, the business is worth as much as a buyer is willing to pay. Finding a buyer could be the hardest part.

Side Note: Someone wrote to me inquiring about buying BoogieJack.com a while back. I must have scared him off, as he never replied to my "it would take a substantial offer" response to his inquiry. :)