@marks.market wrote:
Im considering selling. Im just losing motivation to continually list stock, compete with people who undercut my prices, and posting sales. Has been 8 years. I just dont know what to sell the business for so looking for some honest opinions.
Heres the run down:
Included would be roughly $45,000 cost price in stock which has roughly $110,000 sale value, $4000 in furniture and shelving, a computer, $1000 in postal and office supplies, business accounts with Australia's 2 biggest DVD distributors, 1140 active eBay listings and stock for a further 200 or so listings, an eBay account with over 25,000 sales and over 15,200 positive feedback points at 99.9% positive rate, business name and logo. Currently earning about $15,000 - $20,000 profit a year and is easily capable of earning $30,000+ with current stock levels (just dont have the time while also working full time). This can be earned from around 2 hours work a day.
Any thoughts appreciated
I just realized (thanks to Bully and Chameleon) that we weren't answering the question that the OP actually asked.
So, OP, here are my thoughts, based on a few provisors and considerations.
1) eBay will allow the person to take over the account as it is with no selling restrictions, and with the feedback score and comments.
2) In a B&M world, I would be buying a legally binding lease. This is the businerss' worth. On eBay, there is no such lease, they could close me down tomorrow, even if they approve me today. ie, there are no guarantees that I will be able to operate tomorrow (or any time frame there, but you get my drift? - I have a lease that doesn't tell me how long I will be allowed to trade for.
3) In the eBay T&C, they say they can change the terms of the contract at any time (ie policy changes etc) by giving notice. if you like the changes, keep trading. If you don't like the changes, then we will release you from the contract and you can leave/close your account/become inactive. In a B&M, the terms of my lease MAY not contain those provisions (I've never seen one that does - each new term has to be mutually agreed upon and existing terms cannot be taken away if I don't want them. They can't change the amount of my lease during that period (no increase in fees) etc etc etc.eBay may decide tomorrow to put their fees up, enforce free post, one day shipping (for example) a whole host of things that the new owner (or even you), don't like or cannot comply with, severely impacting the business.
4) No control over competitors, nothing stopping 50 people setting up in opposition against me tomorrow. The business is not exclusive enough to prevent that, and in comparison to the "real world", those competitors can be from any where in the world (they could even be you) whereas in a B&M, the amount of video stores they can build in my vacinity of market share is limited by building and council restrictions etc iykwim. and if in a shopping centre, it is unlikely the owner will lease space to too many other busineeses like mine.
5) In B&M, goodwill is partly influenced by vacinity - ie if it's a big town, I will naturally get more businesses as people aren't going to drive 200klm on a regular basis to buy a DVD, whereas on eBay it is as easy as a computer click.
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What this means, is that there is no val;ue whatsoever in the "history of the business" or it's established credentials.
So value for this component of the business will be a purely personal thing, for me, not much. The feedback score does not give the security that a B&M store has, and really, that's all an eBay business is - a feedback score.
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A general rule of thumb for a B&M is 3 times the net profit plus stock and f&F. But this is based on contingents such as length of lease etc. So a B&M with a 4x4x4 year lease. I'd negotiate around the $45,000 figure. But you have no lease to offer (well a minimal one) and your competitor base is unstable, as is the actual market as technology evolves. For how much longer will DVD's be "relevant"? (I don't know, but I would research if I was interested in this business) so really the amount is nominal, maybe a few thousand at most just because of the established business reputation iykwim.
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Included would be roughly $45,000 cost price in stock which has roughly $110,000 sale value,
resale value means nothing. to determine the stock's true worth, at best, the figure to offer is proveable cost price. BUT I would be looking at things such as, how long has that stock been sitting on your shelves. What is that stock? I'd want to know if it's the stock you haven't been able to sell for years, or has little demand (a Mary Poppins Movie?).
Why do you have that much stock on hand?
at $45,000 at say $5 a movie, that's 9,000 movies, Do you sell that many a month? You only hold stock that you can sell in the next month or so, so the fact that there is so much there at all suggests that a lot of it doesn't "move", so why would I want it? Your turnover may well be from 2 or 3 movies that you continually restock, whilst this stock is "dead".
so it's true "value" may not really be the cost you paid. the true "value" is what kind of demand is on the stock that you have and what you can get for it if you have to sell it in the next week. So realistically, (rhetorical, you need to answwer this for yourself) if you needed to dump this stock tomorrow, how much could you realistically get for it?
=> Maximum cost price dependent on the above variables
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$4000 in furniture and shelving, a computer, $1000 in postal and office supplies,
at best, the worth of this stuff is the depreciated value on your accounting statements. and maybe, the postal and office supplies (except for stamps) about 1/2 if I was lazy or wanted stock ready to go iykwim, BUT, does a business turning over about 150 DVDs a month need $1,000 of postal and office supplies? I need 150 envelopes, some bubblewrap, stickytape and a pen. and stamps if posting as a letter, what more do I need?
it means nothing for an online business. I can work from my lounge chair that I already own, and store the stuff asny way I want.
second hand furniture is worth SFA
=> Depreciated value plus $300 for office supplies
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business accounts with Australia's 2 biggest DVD distributors,
this is worth nothing. I could make a few phonecalls and have 100 sales managers wanting to sell me thier stock.
UNLESS, these two sp[ecific suppliers have given you some form of exclusivity?
Have they given you some kind of exclusive rights to some merchandise? ie you are the only person they will sell tellytubby DVD's to? Can they somehow stop others from getting telly tubby DVD's from elsewhere to sell?
=> $0
1140 active eBay listings and stock for a further 200 or so listings,
ok, so 1300 DVD's are worth $45,000? multi quantity, I'm guessing? (irrelevant here)
This tells me you have to list 1300 things to sell 10%, so you're carrying too much stock. For me this now makes this not a viable business, it is unsustainable. So I would not be promoting that AT all. If they ask for pre existing listings, I'd be skimming over this as best I could.
and remember that any of these listings could be removed by eBay at any time or someone may buy the item, so you may not even need them at the time of sale iykwim. The stock is no good if the "shelf space" (the listing) is not viable.
also, will the new person have selling restrictions? They might not even be allowed to list that many items.
=> Throw this in a sweetner to seal the deal for someone who is really lazy and doesn't want to make their own listings or wants to get started straight away.
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an eBay account with over 25,000 sales and over 15,200 positive feedback points at 99.9% positive rate,
The reality is that this is really not worth much at all because you do not have a captive market. For a DVD, people are happy to risk $20 if they think they are saving a few dollars, so really?
also, without a "lease" and a guarantee that the business will be able to continue to operate, the reputation doesn't matter long term, it's a short term "advertisement"
All this says is "the last owner was good. There is no guarantee that this dude will be as good as the last guy" It provides no validity or security to the new business at all (ESPECIALLY IF, as suggested elsewhere, they have to stick an "under new management" sign somewhere.
That feedback is the resume of the previous owner, not the operating business. For the new owner, it is like a fake ID
and a new ID (granted with restrictions) are free (remember also, no guarantee that eBay will allow new person to trade unrestricted,
so REALITY? that number gives you a few buyers who don't know to check feedback etc.
In the online world, people will look for product, price, then reputation if you are lucky.
=> This is worth one months worth of average anual profit, maximum. (the duration of the listing is generally 30 days in a store, hence that figure)
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business name and logo.
Is there anything special about it?
Do you sell your own branded merchandise?
In the eBay online world, this means very little considering the business tools and availability of images etc for free. it is very different to a B&M store where your logo/sign is your advertisement and seen by everyone who walks past your store. In eBay, they don't see this stuff till they open up your listing.
=> $0 - another sweetner.
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Currently earning about $15,000 - $20,000 profit a year and is easily capable of earning $30,000+ with current stock levels (just dont have the time while also working full time). This can be earned from around 2 hours work a day.
Potential earnings can't be counted on or "sold", so just an advertisement slogan really, the price will be determined by your previous accounting statements. (so $15,000 - $20,000 p/a and from there the considerations i mentioned above
But there is no guarantee that this business will even be operational in a month's time, eBay can pull the plug at any time.
=> at most, one month's profit derived from previous accounting statements and the considerations above
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So, I'd start at $5,000 maximum plus agreed upon stock price and negotiate from there.
When you break it down like I just did, that is it's true worth and potential value.
($3,000 for potential earnings and reputation + $2,000 for your f&F and office supplies and the rest (or whatever their depreciated value is)
Some people can go their whole lives and never really live for a single minute.
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