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Old 11-26-2001, 12:04 PM   #1
Vito
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Default Advice on appraising retail site

I am considering selling one of my sites, but I am having difficulty in properly appraising it for sale. I'd appreciate some advice.

1.Your name
Vito Ceniti

2. URL of the site
www.talkingpresents.com
This is a retail gift site that stocks and sells 150 different products

3. age of site
14 months

4. traffic statistics
15M visitors/month, 39M pageviews/month

5. asking price
Don't know yet, asking for advice on appraising it.

6. your Email address
vceniti@talkingpresents.com

7.gross and net revenue per month
November (so far) $6,700.00 in gross sales, will likely be about $8,000.00 for the whole month.
Net monthly income for November: approximately $3,800.00
No advertising revenue except for a negligible amount per month for popunders from AdPowerZone on my Contest Page

8.reason for selling
Not sure I want to sell yet, unless I get a good price for a viable business and to compensate for many months of developing the site.

9. willing to train new owner?
yes, for a 30 day period

Additional notes:
Sales in November are about double the previous month. Part of that is Christmas shopping, part is attributed to the 60% (average) increase in growth the site is experiencing month over month in traffic/revenue. Will provide full stats for all 14 months.

All prices in this post are in Canadian dollars

I have a merchant account through InternetSecure - I can process realtime online transactions in any currency in any country

Stock on hand: Approximately $10,000.00 cost (approx $23,000.00 retail value)

This site is indexed highly (ranking 1st to 10th) for many targeted keywords with Yahoo, Google, MSN, excite, ask jeeves, lycos, go, and many more.


I would appreciate some sound advice on how to appraise this site.

Thank you.
Vito
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Old 11-27-2001, 08:04 PM   #2
Edwin
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I don't have an answer for you on value (in all honesty, your site is probably way outside the experience zone of the vast majority of posters here...) but I did have one question:

Have you tried running the site with all prices (and transactions) being processed in US$ rather than Canadian$?

I have a hunch (and it really is no more than that) that if you are getting a diversified mix of traffic, you'll make more money by charging in US$ than in Canadian$ as the average surfer is MUCH more familiar with sites charging in US$ (especially foreigners!) You may find that *some* people are currently put off by your site being in Canadian$.
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Old 11-27-2001, 08:37 PM   #3
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Hi Edwin:
When I first set up the site, I thought long and hard about which currency to use. As it turns out, it works as a good marketing tool to be in Cdn dollars. Over 90% of my customers are from the US. They love to see the currency savings when they click on the currency converter that I have on EVERY product page. It's like finding a bargain. But then again, I could be totally wrong. Perhaps I'd have twice the sales if it was in US$. It's just too hard of a transition to "test out".
If evaluating the site is beyond the expertise of this forum, where would you suggest I go for advise?
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Old 11-28-2001, 05:39 AM   #4
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Well, you know... somebody could come along 5 minutes after I post this and prove my earlier remark wrong by appraising your site. With that proviso in mind...

Before I even continue, I wanted to check something to make sure I'm on the right track... in your post, are you using "M" to mean "thousand" or "million"?

I am assuming that you mean you have 15,000 visitors a month, as with 15 million visitors a month you'd be right up there in the Top 20 or so of all e-commerce sites.

As for where to go to evaluate your site, I really am not sure. There is a business valuation calculator on "BizBuySell.com" which attempts to value businesses compared to existing businesses that have been entered in their database, but I don't know if it's accurate or waaaaay off.

I guess some of the factors that will have a strong bearing on valuation are:-

A) How much effort (i.e. manhours per week/month) is required to close the sales and box/ship the products?
B) How much effort (i.e. manhours per week/month) and knowledge is required to keep the site updated?
C) How much must be spent on acquiring new traffic every month?

Again, even with the above info I won't have a "right" answer for you, but I guess the more information you can disclose, the easier it is for somebody to put a pricetag on the whole thing.
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Old 11-28-2001, 06:02 AM   #5
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Edwin:
I WISH I had 15 million visitors per month. Regrettably, only 15,000.
I'll have a look at BizBuySell. I guess the problem is when selling an Internet business, you don't always adhere 100% to the time-honored formulas used in selling conventional ground-level businesses. It seems new standards (high & low) are set every day. Personally, I don't think anyone truly knows yet how to properly appraise an Internet business.

1) It takes about 4 to 5 hours per week to ship out orders. It doesn't take any time to close the sale, since it is all done online (unless the odd time the customer calls the toll free line).

2) After getting to know who the suppliers are, there is no specific knowledge required to run the site. This is assuming the operator has basic knowledge of HTML, CGI. It should take about 3 to 5 hours a week to keep the site "fresh" with weekly promos, new products, etc. I spend significantly more time on it, but that's because I have a passion for the site, and never get tired of trying to improve it.

3) I really don't spend any time acquiring new traffic every month. I suppose I should, but since the traffic seems to be growing on its own on average 60% month over month, I spend more time "tweaking" the site to improve the conversion rate.

Hopefully this will add to the information needed for someone to give me their thoughts on a value for the site. It doesn't need to be a "professional" valuation. Just some dialogue about it will hopefully put me in the right direction. Eg.: Is there a multiple of the gross/net monthly revenue that you would use in part of the calculation? Just stuff like that...

Edwin, thanks for getting it started...
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Old 11-28-2001, 08:36 AM   #6
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You're welcome

Again, this is not answering your question as such, but have you considered:-

A) Putting the prices further "up" the hierarchy so that people can see items and prices together (rather than having to click down to each item)?

B) Making the currency conversion more automated... I'm assuming all your data is in a database - so it should be possible to have a clickable link that will bring up a mini popup window with the amount pre-converted into US$ e.g. if I click on a $99.99 Canadian item's converter the window will pop up "$99.99 Canadian - that's only $47.22 US!" (or whatever - that's not an actual example)

Again, like my earlier suggestion, this is untested - but I believe both the above changes will increase your revenue... and the more revenue you have, the more the site's going to be worth!

You might also consider putting a Privacy Policy on the site with a link at the bottom of each page (always reassures people) and making your "Contact Us" link into a separate page rather than just firing up an email client...

Sorry, I realize I'm turning your "appraisal" thread into a site critique thread, so I'll stop here for now.
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Old 11-28-2001, 10:09 AM   #7
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Not a problem, Edwin. Your critique has very valid points which I will address.
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Old 11-28-2001, 12:31 PM   #8
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Welcome to geek/talk Vito

Very nice site. My opinion of the value and please remember I'm not in the buy and sell domain biz but in my prior life I bought and sold lot's of other things

Depressed economy Formula:

Pre Tax Annual Net revenue (for the last 12 months) + wholesale value of your inventory x the "guesstimate factor" = the asking price

Example:

$30,000 + $10,000 x 2 = $80,000 asking price

Having said all this I have an idea. Consider selling your products on Ebay.com. I'm rather sure this would increase your revenue and obviously they have millons of eyes looking at their pages. I'm fuzy on the details but they have special programs and terms for folks/merchants selling large numbers of products. Your products are a perfect fit and many folks are very successfull doing this.

Perhaps I missed this so please correct me:

1. Attribution from happy customers.

2. Email your customers and prospects with special deals.

Good luck and I hope this helps some.

Last edited by Steve_S; 11-28-2001 at 12:31 PM.
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Old 12-13-2001, 10:49 AM   #9
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well, i read somewhere that a site is worth 2 years of profit...

As you said, november is partly increased by christmas presents, but you also mentioned your site is growing by 60% every month

therefor i'd say right about now your site is worth 24x profit of november
that would make 91200... ish

course i could be as far off as anyone else, but it's fairly close to Steve's 80,000 offer which shows we're both in about the right range. Of course you'd probly prefer 90 over 80,000...

of course if you were talking about 3800 canadian dollars, then i'm talking about 91200 canadian as well (not sure if steve is or not).
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Old 12-13-2001, 11:23 AM   #10
Aaron Dragushan
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Hi Vito,

First of all, great site, congrats. At the end of the day, a fundamental question for the buyer is, "how long is it going to take me to make back my money?"

(Assuming no growth or inflation)...

If the site costs $80,000 and recoups $2,000 in profit per month, it will take just over 3 years for the buyer to recoup their investment. That's a great return for them, except that the internet turns everything on it's head, especially since search engine rankings are the basis of much of your traffic, and nothing online is guaranteed for long...

2 years sounds like a good number, though I'd add the value of your stock to that. I don't think you can multiply by November's numbers though... maybe look back over your entire year and take the average monthly profit?

Good luck to you, and congrats again for putting together a great site.
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Old 12-13-2001, 12:13 PM   #11
Vito
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Aaron:
Thank you for the kind words about my site. It helps to make the countless countless hours of work worthwhile...

As I sit back and analyze the growth pattern of the site, I am leaning towards hanging on to it for at least another year. Now that the site is really picking up steam (it's been an amazing Xmas season for sales), I'm starting to think that I'd just be giftwrapping a moneymaker for someone, after doing all the really hard work - getting a niche retail site exposure and reputation.

Whoever bought it would be able to "run with it" on its own momentum without too much effort. I might be selling myself short by selling too early...:)
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Old 12-13-2001, 01:49 PM   #12
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aaron's probably right (average of last year) but as vito said it's still picking up momentum... which is exactly why i picked november's numbers. It may not be what it's worth to buyers, but it's what it should be worth... which basically makes my whole statement useless :\
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