Frequently Asked Questions
Are there any important valuation metrics that the FBA Guys' Valuation Tool does not take into account?
To calculate this, we would need to look at your detailed Profit & Loss Statement and determine things such as add-backs, inventory fluctuations and more.
There are some metrics we don’t factor in, such as the level of competition in your category, the potential lifespan of your products, the presence of key man risk and a few other factors.
While they may seem significant, all of these metrics are highly subjective. You can expect our valuation to be close to accurate, even without factoring these in.
There are several different valuation methodologies. Which one does your valuation tool use?
As most people using our tool will not yet have determined their true SDE, we have to make some assumptions, but we aim to get as close as possible without diving deep into your financials.
Are your valuations legally binding? Can I use them in court?
For this purpose, you would need to speak to a business appraisal company.
How did you come up with your algorithm?
But you may be able to find some hints here.
The valuation tool didn't ask me about my Instagram followers / my great domain name / my fantastic customer support process. Surely all of this adds to the valuation?
While we have to forgo some data points that could potentially add to or remove from your business's valuation (you wouldn't want to spend an hour filling out the valuation form, would you!), we've actually covered all the big ones.
When it comes to things like the business's presence on Facebook or its amazing domain name, contrary to popular belief, these are actually NOT things that add directly to the value.
That's because your business's value is derived by applying a multiple to your yearly earnings and such items have already contributed to your earnings. This means that if they were to be taken into account as an additional value-adding factor, we'd be effectively double-counting them.