There are hundreds of metrics that are in play when it comes to business valuations. But all of them belong to one of 4 distinct categories, making up the 4 Pillars of Business Valuation, as we like to call it.
I’m going to break down the 27 factors that matter most to an FBA business valuation. Ultimately, this is the price someone would be prepared to pay for your business if you decide to sell and move on to something bigger.
Seller’s Discretionary Earnings, Discretionary Cashflow, Seller’s Discretionary Income – call it what you will, this is the most important figure when it comes to the valuation and sale of any business. If you don’t know your SDE, you have no way of knowing how much your business is worth, period.
Regardless of whether your business is valued by a human or by a computer-based valuation tool, there are two key prerequisites that need to be in place for any valuation to be even close to accurate. These are: …
Everyone knows how extremely important it is to have a healthy profit margin. We’ve even covered it right here just a little while ago. But what’s a good margin? 15%? 25%? 50%? The answer, as you may guess, is it depends.
You’ve probably heard some people claim that no online platform can ever accurately value a business. Heck, I’ve said it myself (and then debunked it 2 years later). So what’s it all about and CAN an online valuation tool really be accurate and useful?
If you’ve given selling your FBA business any thought, you probably know that most of the value of an online business comes from how much money it makes. For the most part, this is correct, but there are also many other things that directly influence the value of an Amazon business, some of which are surprisingly quick and easy to take advantage of.
You don’t have to be in the eCommerce game for long to hear terms like margin, gross margin and profit margin thrown around. And for a good reason – gross margin is perhaps the most important metric of any ecommerce business.