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Common Questions We Ask Clients To Establish Website Value
By Quiet Light
You’ve invested a lot of time, capital, and effort in building your business. When it’s time to sell it to someone else, making sure you get the best valuation possible is key to a successful—and profitable—transition. As brokers, we’ve developed a set of standard questions we ask sellers, during our initial evaluation to determine website value.
The answers we receive give us a reliable way to gauge the overall health, potential longevity, future viability of (and risks associated with) a business. They also help you identify potential problem areas and make whatever updates or revisions are necessary to help you make sure you get a better valuation.
Website Value: Asking the Right Questions
While the questions we’ll ask you based on your specific circumstances and goals will vary, we ask every client the following questions in order to help us establish a baseline we can use to guide them toward a successful sale.
- When did you start your business? Once they’re more than five years old, businesses have beaten the odds, as half of all small businesses fail within that period. Businesses over ten years are even stronger, as only a third of small businesses make it to that point.
- How have revenues trended over the history of your business, particularly over the last five years?
- How are traffic and revenue generated? We identify all revenue and traffic streams, and their potential for expansion and improvement.
- What is your average weekly time commitment as an owner of this business? Is this property a lifestyle business, or does it require significant hands-on management every week?
- What are the gross margins on the products produced by your business?
- Does your business have a brick-and-mortar component? Also important: the degree to which the business depends on the physical part of the business with regard to relocation and (if applicable) rebranding.
- Does your business require inventory, or is it a drop-ship or Web-only business?
- How many employees does your business have? Also, are existing employees willing to relocate or work remotely during and after transition?
- How competitive is the niche in which your business operates?
- Is there room for growth? Understanding the potential earning power of a business is as critical as knowing its current one.
As I said, this list isn’t exhaustive, but it does provide a solid base of information from which we can proceed to valuation and listing.
Learning from the Answers
Every business is different, and every seller has different goals and priorities. We review your answers to our standard slate of questions and factor in your financing requirements, willingness to remain active in the business after transfer of ownership, and other data to create a listing that will attract buyers whose priorities align with your own.
Some of these questions might seem elementary, but the information we collect from you during this period is essential to creating a winning listing. Some factors—e.g., strong growth, upward-trending revenues, a dominant place in the market—have a positive effect on value, while others—such as declining revenues, single-stream revenue, high overhead, etc.—can weaken the overall value. It’s important to note, however, that it’s absolutely possible for you to raise the value of your business by addressing problem areas before listing it for sale.
A successful sale for any business starts with a thorough understanding of the business, its history, its performance, and its potential. When you’re a Quiet Light Brokerage client, we’ll take the time to ask you the correct questions—and work with you to find the best answers—to help ensure you get the best listing, valuation, and price possible for your business.