{"id":79454,"date":"2022-11-04T09:00:00","date_gmt":"2022-11-04T13:00:00","guid":{"rendered":"https:\/\/crazyeggblog.wpengine.com\/?p=79454"},"modified":"2026-01-06T15:14:01","modified_gmt":"2026-01-06T23:14:01","slug":"how-to-value-an-ecommerce-business","status":"publish","type":"post","link":"https:\/\/www.crazyegg.com\/blog\/how-to-value-an-ecommerce-business\/","title":{"rendered":"6 Easy Steps to Value an Ecommerce Business"},"content":{"rendered":"\n

If you\u2019re ready to sell your ecommerce business, apply for a small business loan, or raise significant funds for your business, you need to know how much your business is worth. There are several ways to tackle this important question, from AI-powered calculators to individualized quotes or DIY valuations.<\/p>\n\n\n\n

The process can be confusing and time-consuming, which is why we recommend working with an established business brokerage service like Transworld Business Advisors<\/a>. With over 40 years of experience, this company knows the business world inside and out. You can either use its free valuation tool or speak to an advisor for a more thorough ecommerce valuation. <\/p>\n\n\n\n

Crazy Egg\u2019s Favorite Tools for Valuing an Ecommerce Business<\/h2>\n\n\n\n

We\u2019ve done some digging on good service providers that can help you with a valuation of your ecommerce business. Here are three top brokers to consider: <\/p>\n\n\n\n

Transworld Business Advisors<\/strong><\/a> has expert business valuators on staff, and they can provide a personalized, in-depth report of how much your ecommerce business is worth. You can also use Transworld\u2019s free valuation tool as a starting point<\/a>. <\/p>\n\n\n\n

First Choice Business Brokers<\/strong><\/a> takes a deep dive into your business to unearth assets that you may not have considered before. Learn more about First Choice\u2019s market price analysis and contact a broker today<\/a>.<\/p>\n\n\n\n

VR Business Brokers<\/strong><\/a> prides itself on being a leading seller of established businesses, having been in operation since 1979. Find a VR office location in your state<\/a> to get a valuation.\u00a0<\/p>\n\n\n\n

With a few solid options to choose from, let\u2019s walk through the process of getting an initial valuation with Transworld Business Advisors.<\/p>\n\n\n\n

Step 1 – Get Started with Transworld Business Advisors<\/h2>\n\n\n\n

As our top recommendation, Transworld Business Advisors<\/a> makes it easy to get a valuation of your ecommerce business. Our advice is to start by using the company\u2019s business valuation calculator. You won\u2019t get an exact number, but you will get a price range that Transworld estimates a third-party buyer on the open market would pay for your business.<\/p>\n\n\n\n

Once you land on Transworld\u2019s calculator page, you\u2019ll enter your name, email address, and ZIP Code. Next, the calculator will ask you to select the industry you\u2019re in, along with the amount of revenue and net profits your ecommerce business earns each year. You\u2019ll also be asked to enter how much of the net profit goes toward your salary and benefits. <\/p>\n\n\n\n

\"Screenshot<\/figure>\n\n\n\n

We tested out the tool using a hypothetical ecommerce business in the furniture retail industry, entering an annual revenue of $8,000,000, a net profit of $700,000, and an owner\u2019s salary and benefits amounting to $250,000.  <\/p>\n\n\n\n

The ecommerce business valuation was completed within seconds. Using the latest market multiples along with the information we entered, Transworld gave us an unofficial business valuation range of $1,900,000.00 to $4,465,000.00.<\/strong><\/p>\n\n\n\n

\"Screenshot<\/figure>\n\n\n\n

This calculation is a good starting point. However, it\u2019s quite a wide range. If you\u2019re looking to sell, you\u2019re going to need a more accurate number\u2014or even a detailed business valuation report. That\u2019s where the rest of Transworld\u2019s services come in.<\/p>\n\n\n\n

Before we get into that, let\u2019s touch on the basics of business valuation.<\/p>\n\n\n\n

Step 2 – Understand the Basics of Ecommerce Valuation<\/h2>\n\n\n\n

There are many ways to create a valuation for a business. For ecommerce businesses, the most common way to reach an estimate is to calculate your business earnings\u2014that is, your net revenue\u2014and multiply that number by an industry multiplier. <\/p>\n\n\n\n

Let\u2019s break this down. <\/p>\n\n\n\n

How do you calculate earnings? There are two popular methods: seller\u2019s discretionary earnings (SDE) or earnings before interest, taxation, depreciation, and amortization (EBITDA). <\/p>\n\n\n\n

SDE is calculated by taking your revenue and subtracting the costs of goods sold and your operating expenses. Then, take that number and add to it owner compensation and non-essential expenses.<\/p>\n\n\n\n

Small businesses often use SDE because it helps buyers know how much they\u2019d make if they took on the business and worked it full-time.<\/p>\n\n\n\n

For EBITDA, it\u2019s easier. Add your net income, interest expense, income taxes, depreciation, and amortization. This is more useful for larger companies, as it helps investors see how the business compares to similar brands in the industry. <\/p>\n\n\n\n

Plus, multimillion-dollar companies rarely have a single owner-operator in charge of the entire business. The EBITDA calculation helps investors see how much they\u2019d earn after everyone running the business received their salaries. <\/p>\n\n\n\n

Most ecommerce businesses are small enough that the SDE method is more applicable, as you can see in the two Transworld listings shown below. <\/p>\n\n\n\n

\"Screenshot<\/figure>\n\n\n\n

Keep in mind that the formulas above are somewhat simplified. Your business advisor will help you calculate SDE or EBITDA more precisely after taking a close look at your business structure, financial statements, and other records. <\/p>\n\n\n\n

After calculating earnings, your advisor will help you determine the industry multiplier. This number can vary a lot based on what industry you\u2019re in, ranging from 1x to 6x. With the mishmash of industry factors that can influence the multiplier, a business advisor\u2019s experience and input are invaluable. Unless you\u2019re an expert appraiser or business valuator yourself, your best bet is to get help from a professional. <\/p>\n\n\n\n

Step 3 – Get Your Records in Order<\/h2>\n\n\n\n

Before you get started with a business broker from Transworld or anywhere else, you\u2019ll need to get organized. Your business broker or advisor will need to comb through all of your ecommerce business\u2019s records, statements, and other paperwork to make an accurate valuation. <\/p>\n\n\n\n

So if you\u2019re behind on entering data into QuickBooks, it\u2019s time to set aside a day\u2014or three\u2014to catch up. You\u2019ll also need to make sure the data in your accounting software matches up with the numbers in your business bank account. <\/p>\n\n\n\n

Next, gather records going back at least one year, but preferably two or three. Here\u2019s a non-exhaustive list of what you need to have handy: <\/p>\n\n\n\n