"So, what do you think my web-based business worth?", someone recently asked me. I questioned them about previous year’s income, expenses, traffic, page rank, and the amount of effort they put into the business.
After listening to their answer, I realized that fifty people when asked this same question, will probably provide fifty different answers, and that all of these answers are likely wrong.
What does matter is what someone is willing to pay for it.
When selling a house, for example, real estate appraisers start by looking at comparable sales in the neighborhood and adjusting the value based on the positives and negatives the home has. The number they arrive at is a historical value. Lenders require them. Real estate agents love them. Sellers try to optimize them. But the house is only worth what someone is willing to pay for it
Business brokers will likewise place a value on a business based on historical earnings (which don’t guarantee future earnings), potential for growth, market niche, etc. But again, the value of the business is in the eye of the purchaser. Of course, if there are tangible assets in the business, those can be liquidated for a known value.
For a web-based business, it all comes down to perception . Is the business making money or is it likely to do so? If there’s lots of unique traffic, then there is additional possibility to make money by selling ad space.
The problem in negotiating "worth" is when there’s a discrepancy between the perception of the buyer and the seller. The buyer is looking for flaws to justify a price reduction. The seller highlights the uniqueness to justify a top price. Both want to walk away from the deal feeling like they "won".
Instead of getting caught in the perception game, consider the cost for not buying or not selling. If you’re exhausted running the business, then what’s it worth to you to reduce your stress? How about the late nights worrying about the new competition that’s threatening to overshadow your success? When was the last time you took a vacation?
You might regret the sale or purchase, but if you did your "homework" to verify the "numbers", and you got wise counsel to help with the transition, then everything that happened is investment in your education.
Besides death, taxes, and change, there are no guarantees in life or business.
(Since people love hearing about online businesses that "hit the lottery", read the story about pizza.com selling for $2.6M (http://blog.wired.com/business/2008/04/pizzacom-domain.html) or a story about Fund.com and Harmony.com for $10M (http://www.webpronews.com/topnews/2008/05/12/is-harmonycom-worth-5-million))
The $100,000 Question - To learn more about this author, visit Jay Hamilton-Roth's Website.
Like this article? Share it with your friends
 |
Related Articles |
|
The Hidden Importance of Listening
|
| |
While he had everything under control, the prospect asked him a question and he proceeded to explain his position and then finally answered their question. The problem with that is the order should have been reverse...
|
Quit Making Your Insurance Prospects Feel Stupid
|
| |
Does it feel awkward when you ask prospects questions? You ask a question and the prospect just kind of looks back at you. At best they may grunt and nod.
|
Are You Asking the Right Questions to Increase Your Sales?
|
| |
The right questions probably aren't the questions you’re using now. Do you and your prospects feel uncomfortable with the questions you're asking?
|
Five Tips for Using Great Questions
|
| |
We are always seeking better answers. Yet these only become available through great questions. Here are 5 tips for using great questions to get the answers and results you want.
|
You are Always Asking, Always
|
| |
Do you sometimes wonder how to ask or what to ask? Asking occurs in many forms, with or without words. Asking is an integral part of life.
|
 |
Related Businesses - Evan Elite Authors |
|
The Evan Elite Authors program is currently in beta phase. For details please contact us.
|
|
|
Jay Hamilton-Roth
(Visit Jay's Website)
Jay Hamilton-Roth founded Many Good Ideas
(www.
ManyGoodIdeas.com) to help small
businesses brainstorm, design, and
implement effective marketing strategies.
He combines creativity with common sense
to demystify the process of getting great
results. He has used his high-tech
background from MIT to help him launch
five businesses. He consults with
companies in a wide range of industries
and publishes a monthly marketing
newsletter and daily marketing blog (ask.
ManyGoodIdeas.com)
|
|
|
|