You’ve finally done it.
You’re proud to have a thriving online business that serves as a source of income. After all the time and effort you’ve invested into your business, you might feel that your business is quite valuable. And why shouldn’t it be? You’ve nurtured it from the ground up, so it should be worth thousands.
Right?
Although many business owners put their all into growing an online business, calculating its worth includes many factors. You’ll need to use a valuation tool to get a clear picture of how much your business is worth.
Why is it Important to Know the Worth of Your Business?
It’s important to know the worth of your business even if you’re not looking to sell.
Why?
Getting a valuation of your business can help you improve how you run your business. Once you see how much your business is worth, it might reveal areas where your business needs some improvement.
For example, could you diversify your monetization methods? Or is it time to focus on your email list to build a stronger social presence? Your business valuation number can help you identify areas of improvement and create a plan to follow through.
Empire Flippers Business Valuation Tool
The Empire Flippers business valuation tool takes only a few minutes to fill out, perfect for busy business owners. You’ll want to have the following information on hand to fill out:
- The date you created your business
- Average monthly gross revenue and expenses
- Average monthly unique visitors
- Number of email subscribers (if applicable)
- Number of social media followers (if applicable)
- Other relevant information (ex., Number of products, downloads, etc.)
Note: The number you receive on this initial evaluation won’t always be the price you get after listing your business on the EF marketplace. Their vetting process is more detailed and takes additional factors into account.
Valuation Equation
The equation that Empire Flippers uses to determine the value of your business is:
[6-12 Months’ Average Net Profit] x Multiple (Typically 20–60+)
Along with this equation, Empire Flippers delivers the present value of your business in two ways:
Seller Discretionary Earnings (SDE)
Or
Earnings Before Interest, Tax, Depreciation, Amortization (EBITDA)
Seller discretionary earnings (SDE) is a standard valuation method typically used to determine the value of small businesses. This method is calculated based on the net earnings of your business before tax. With SDE, a business owner can see how the business performs without an owner’s salary or any costs that aren’t necessary to run the business.
Earnings before interest, tax, depreciation, or amortization (EBITDA) is similar to SDE, but it is generally applied to larger businesses that are not owner-operated. As larger businesses often have private funding groups, there is no single business owner to account for. As a result, this model adds back the EBITDA to the earnings.
Calculate Your Online Business Worth with the Empire Flippers Valuation Tool
Whether you’re looking to sell your business next month or next year, finding out your business’s value is never a bad idea. Use the Empire Flippers valuation tool to evaluate your online business objectively.
