Just the other day I talked to a guy that had a website with revenues of around $2,500 a month, and a net earnings of about $980. Can you guess what the company evaluated at? After I asked some very basic questions, and requested access to his Google Account and financials, I made a pre-offer of around 10 times his earnings, he snapped back at me that is was worth no less than 26 times his earnings. His company was less than one year old, it has already seen its explosive marketing, and was on a level point.
Where it would go from there was anyone’s gu taiwan email list ess. I liked the site and was willing to pay 10 times the earnings simply because the owner’s design looked like something from the early 1990’s. He was over-paying hosting by 3 fold, and was missing 2-3 other revenue options that could make the site a million-dollar venture, if it all worked out. So, instead of offering 6-8 times his earnings, I felt I could hit a home run at 10 times and everyone would be happy.
But someone else took the bate and offered 20 times earnings. Now they have to hope the site will double, if not triple, within the next year to adsorb all of that risk and capital they just invested. Unless it’s a home run, they will most likely lose the money they invested and then some. Another business friend put it this way: "Businesses are VERY high risk, so when you invest in such small businesses you want to get 89% of your investment back within the first year".
Because he was so stuck on getting 26 times his earnings the site never sold to me
-
- Posts: 13
- Joined: Sun Dec 22, 2024 3:51 am