No fluff. No filler. Just 15 direct answers to the questions that determine your ecommerce business’s value. Read what you need, skip what you don’t, and walk away with a clear understanding of your number.
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Quick Answers (Top 5 Most Common Questions)
1. What’s the standard valuation formula?
Annual SDE x Multiple (2.5x-3.5x) = Business Value. SDE = net profit + owner salary + personal expenses + one-time costs.
2. What’s a good SDE for selling?
No minimum—but businesses with $50,000+ annual SDE attract more buyers and better multiples. Under $30K SDE, the buyer pool shrinks significantly.
3. How do I maximize my multiple?
Diversify traffic, reduce owner hours, document SOPs, show stable growth, and maintain 25%+ margins. These five factors determine your multiple.
4. What’s the fastest valuation improvement?
Document add-backs. Most sellers undervalue their business by 15-25% because they don’t claim legitimate add-backs. See our add-backs guide.
5. Should I trust one valuation tool?
No. Run 2-3 tools from different methodologies. Reconcile the outputs. Validate against comparable sales.
Advanced Valuation Questions
6. What are legitimate add-backs?
Owner salary above market rate, personal vehicle expenses, health insurance, one-time legal fees, and non-recurring marketing costs. Documentation required.
7. How does traffic quality affect value?
Owned traffic (organic, email, direct) is worth more than rented traffic (paid, social). A store with 60% owned traffic commands a 0.3x-0.5x higher multiple.
8. What’s owner independence worth?
0.4x-1.0x on your multiple. A store requiring 5 owner hours weekly sells for far more than one requiring 40 hours. Document systems and train help.
9. Do niche and seasonality matter?
Yes. Evergreen niches command higher multiples than trend-driven ones. Predictable seasonality is fine; random volatility is discounted.
10. What intangibles should I document?
Email list metrics, content rankings, review volume, repeat purchase rates, and customer LTV. Data-backed intangibles are negotiation leverage.
Timing & Process Questions
11. How long should valuation take?
30 minutes for a baseline. 2-3 hours for a complete self-valuation. 1-2 weeks for professional appraisal.
12. What do buyers verify in due diligence?
Revenue (bank statements), traffic (analytics), margins (expense lines), suppliers (contracts), and customers (concentration analysis).
13. When should I revalue?
Quarterly before selling. After any significant change (traffic diversification, owner hours reduction, margin improvement).
Risk & Red Flags
14. What signals weakness to buyers?
Declining revenue, single-channel dependence, high owner hours, thin margins, and young store age. Each costs you 0.2x-0.5x.
15. What’s the most common valuation mistake?
Using revenue instead of SDE. Revenue ignores margins and produces wildly inaccurate numbers. Always calculate SDE. See our SDE guide.
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