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LETS GET DOWN TO BUSINESS.

Question :
Hey there! We launched our e-commerce business in Feb this year. The sales have been great even with the lockdown. The key successes we saw this year was that we hit a 5 figure income, we have a growing brand with a few retail partnerships and have a very promising product with trademarks and supplier relations in place. The biggest roadblock currently as a  solo entrepreneur is for me to decide whether to invite a partner to help me scale the business or sell the business as is. I say this because my mental energy has fully drained and in order to put in more innovation and scale I need someone to help me. How do I evaluate my business and estimate how much it is worth? I’m either looking to sell a share of the company or sell the company as a whole. Thank you,

Question submitted 18/08/20 @ 05:38pm
Industry: Business Growth
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  • Hi,

    A very interesting predicament you find yourself in here. In the first instance you need to decide if your mental energy and drain is so big that you don’t want to be apart of the business moving forward? Or if you bring someone else on board with energy and continued innovation would this get you more energised in the business.

    Valuation is also very interesting depending on the product, market, sales and margin associated with the business.

    Happy to help with any questions you might have – I have developed businesses, brought into businesses and assisted other in developing their own brands etc.

    Cheers,
    Nick

    Some good points from Nick. Those are two very different pathways to consider.

    With regards to valuation, beauty is in the eye of the beholder. There are various models to create business valuations like EBITDA multipliers, and in early years revenue multipliers….but they all come down to having a willing party who wants to buy.

    Consider talking with some one like Link, who sell businesses. You could probably share your situation with them and get some feedback on the saleability and value they see, and that might be a useful input to your thinking.

    Good luck! Vicky

    Hi there

    I agree with Nick & Vicky’s suggestions. Best will be to talk with people like Link, Platform 1 or ABC consulting etc. as valuing start ups is quite different from established businesses with track record. Your valuation will be based more on your next 3-5 year plan with forecasts & budgets etc.
    happy to help further if required.
    Cheers//Sameer

    Kia ora,

    Deep down you probably know whether you’re really interested in keeping going – right? Assuming you decide you are – and you’re more interested in sharing the load moving forward then a couple of thoughts:

    – Identify the kind of skills you feel the business needs going into the future and the skill gaps you feel you have. This will help you zero in on the skills you’d like to see in a potential business partner/partners. It will help you be more objective when choosing who to work with.

    – If looking at having another person/persons join the business consider taking an approach where they can earn-in over time. Something that incentivises them but balances the risk of it not working out. One option is that you pay them for their time, but give them options to purchase equity over time.

    I agree this can get quite complex – so I’d take Nick up on his offer of a discussion about it.

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