Valuing an ecommerce business isn’t about hope. It’s about math.
But the math has variables. And those variables depend on how you’ve built your business.
Here are 15 FAQs to help you understand your variables and calculate your number.
Quick Answers (Top 5 Most Common Questions)
1. What’s the core formula?
Value = SDE × Multiple. SDE is your profit. The multiple is your risk assessment. Most stores: 2.5x to 3.5x.
2. What’s my SDE?
Net profit + owner salary + one-time expenses + personal perks. It’s the total cash the business generates.
3. What determines my multiple?
Five factors: LTV, traffic diversity, business age, owner dependence, and growth trajectory. Strong scores = high multiple.
4. Can I change my multiple?
Yes. Improve LTV, diversify traffic, document operations, and reduce owner dependence. These are levers you can pull.
5. Where do I start?
Get a free valuation here. It gives you a baseline to work from.
Advanced Valuation Questions
6. How does LTV change my number?
LTV is the biggest lever. High LTV (repeat customers) pushes your multiple up. Low LTV (one-time buyers) pushes it down.
7. What’s the ideal traffic mix?
Diversified. Organic search, email, direct, and paid. If one channel dominates, that’s a risk factor.
8. How important is business age?
3+ years of consistent revenue proves resilience. Younger businesses are riskier and get discounted.
9. What if I’m the only employee?
Expect a lower multiple. A business that depends on you is a job. Buyers want assets that run themselves.
10. Does growth matter?
Yes. Growing revenue commands a premium. Declining revenue gets discounted. Buyers pay for momentum.
Timing & Process Questions
11. When should I start preparing?
90 days before listing. Clean books, boost LTV, diversify traffic, document operations. Every improvement increases your price.
12. How long does due diligence take?
2-4 weeks after an offer. Clean books and organized documents speed this up significantly.
13. What’s the biggest seller mistake?
Overpricing. Unrealistic expectations lead to stale listings and lowball offers. Price realistically from the start.
Risk & Red Flags
14. What are the top risks buyers see?
- Concentration: One product, one channel, one customer.
- Platform dependence: Amazon-only or Facebook-only.
- Owner dependence: No team, no SOPs.
- Declining metrics: Traffic drops, rising CAC.
- Messy financials: Numbers that don’t match.
15. How do I reduce perceived risk?
Diversify everything: traffic, products, customers. Document operations. Hire a team. Clean your books. Every risk you remove adds to your multiple.
Calculate Your Number