You’ve been running an online business for years, but now, something's changed. Perhaps you're ready to move on to greener pastures or follow a different business venture? Maybe the time commitment isn't something you can manage anymore?
Whatever the reason, you might benefit from selling your online business and earning some cash to support your next adventure.
Yes, that all sounds great. But how do you go about doing this? Who would be interested in buying your business? And how do you know how much your blog, website, or ecommerce store is worth?
This is where Flippa comes in. Flippa is an online business for sale marketplace. Here, buyers and sellers can meet and negotiate.
In this review, we’ll take a look at its services in-depth.
Let's dive in!
As we've just hinted at, Flippa is a valuation tool, a marketplace, and an assessment service for online businesses, advertising itself as the ‘number 1 marketplace to buy and sell':
- Affiliate sites
- Ecommerce stores (including Shopify and Amazon FBA stores.)
- SaaS businesses
- Digital Services
On its website, buyers can browse online businesses available for sale across various categories and make bids or place offers to purchase ownership of those sites. Flippa advertises both high-level companies boasting considerable monthly net profits, as well as beginner sites that can be bought for under $2,500.
Right now, Flippa’s marketplace has over 3000 websites, apps, and businesses listed with over 300 000 potential buyers.
Selling on Flippa
If you’re looking to sell your business via Flippa, make use of its free valuation tool right on their website. With this info to hand, you can then choose to market your business on your own or list with a broker. Listing your asset for sale on Flippa takes only 15 minutes, and you’ll immediately be matched with potential buyers.
How Does the Valuation work?
It’s as simple as navigating to their website and entering into a conversation with Flippa‘s valuation bot. Flippa has access to the largest marketplace for buying and selling online businesses and boasts more historical sales data than anyone else on the web. Consequently, the valuation you receive is a good indication of the price you might achieve for your asset.
But how exactly does Flippa determine the price of a business?
For this, it considers five essential factors:
Businesses are considered less risky if they're over two years old. Namely, because they're easier to assess as historical monetization trends become evident. And with 90% of eCommerce start-ups failing within the first 120 days, it makes sense that age would be a significant consideration.
Like all other digital assets, eCommerce businesses are assessed on financial performance. More specifically, their sales rates and net profits. Buyers will consider this a significant factor when it comes to negotiating price, as well.
Sites that enjoy a healthy database of regular readers, users, and/or buyers are valued higher than those entirely ad-driven or only attract one-time transactions. In other words, if you're selling a loyal audience along with your business, this speaks volumes about its worth.
Growth trends help predict how well a business will perform based on its growth and stability so far. Sites that are stable and can demonstrate predictable growth are the most highly regarded.
However, this can be a tricky factor to measure. As spikes in success for small businesses, for example, are often hard to sustain. Buyers will consider an average for firms of that nature.
Ecommerce businesses that are on a decline where growth is concerned may also be penalized from a valuation perspective.
Comparison of Sales Multiples
Historical Flippa sales drive market expectations. For example, eCommerce businesses with $100,000 are currently selling for an average of 2.3x Annual Net Profit in November 2020.
Find a Broker
Once you have your business valuation completed, take the stress out of selling by letting Flippa find you a broker. This is recommended to sellers who don’t have lots of time or don’t know where to start.
A professional broker knows how to present your company in the best light, which is imperative for maximizing the sales price you can expect to achieve.
Flippa partners with 45 brokers located in different parts of the world, specializing in various types of businesses and price ranges. You can work with brokers based in Lithuania, Singapore, Austria, Sweden, Australia, the UK, Thailand, and the US.
To sell on Flippa, there are a few associated costs. Most notably, listing and success fees.
Listing fees come at fixed prices and are as follows:
- Starter and template websites cost $15 to list.
- Domains can be listed for $10.
- iOS and Android apps can be listed for $15.
- Established websites or online businesses generating revenue can be listed for $49.
Whereas the success fee is calculated as a percentage of the sale price when you sell your business:
- If you command up to $50k, there's a 10% fee
- Up to $100k, this lowers to 7.5%
- Over $100k, the success fee is only 5%
If you achieve the sale with one of Flippa's partnered brokers, the success fee is 15% of the overall sales price.
If you’re selling a site valued above $2m, get in touch with Flippa for their VIP program.
You can upgrade your listing with Flippa's additional premium features. For example, a one-time charge allows you to reach more buyers with a boost. Premium boosts are available between $65 – $295. You can also make your listing confidential for $99 and get a listing optimization report for $29.
Buying with Flippa
For buyers, Flippa also offers a finder service that helps you identify qualified businesses. You can request a detailed report to get a better insight into these companies. With this info to hand, you're empowered to make your purchase with your eyes wide open.
Flippa Due Diligence – Verification and Assessment
If you choose to purchase a report, Flippa will analyze the prospective business over several years and give insight into multiple factors that could present red flags.
Flippa can provide the following info:
- Seller analysis
- Financial analysis
- Traffic sources
- Sales and marketing analysis
These reports also analyze the skills required to run the business, what legal history might exist, and how much of a time commitment the company might present to the buyer.
The Red Flag Report is priced at $1,000 and is recommended for businesses valued up to $30,000. This report provides a one-year analysis and an 11-14 page report identifying high-level risks and opportunities.
The Standard Report costs $1,500 and includes an analysis period of 2 years and a 21-25 page report. This is ideal for businesses valued between $30,000 to $200,000. This report goes into more depth about the risks and opportunities and presents detailed financial and traffic information.
The seller's data is also checked against source documents, including verifying selected sales and cost-related transactions. The asking price is also be compared with the costs of similar businesses.
The Enhanced Report costs $2,000 and analyzes three years, and provides a 26-25 page report. This is recommended for businesses valued at higher than $200,000. The enhanced report goes into more depth than the standard report by including an overview of the industry and critical trends. It also compares the asking price based on net profit multiples and other businesses based on relevant ratios, like monetization efficiency and RPM.
Flippa Finder – Identify Your First Investment
If you’re a first-time buyer looking to purchase a profitable online business, you might not know where to start. This is where Flippa’s Finder Service comes in. This is a concierge service that offers new buyers personal consultation to assess their experience and acquisition criteria.
The consultation lasts one hour and comes with an initial set of listings for your review. These will be matched to your mandate and provide you with the pros and cons of each deal. You’ll also receive a follow-up review once you find something to buy. Flippa’s consultants then help you analyze the deal and think through the decision, so you can best navigate your offer.
The Finder Service costs a flat fee of $50 plus a 2.5% acquisition fee payable upon any successful purchase.
Flippa could be a game-changer when it comes to earning cash for a business you no longer wish to run or by introducing you to a massive investment opportunity.
It’s a vast marketplace with thorough protections in place that allow both sellers and buyers to proceed well-informed. With its guarantee of beating any platform or broker on success fees, Flippa is one of the best online marketplaces to head to buy or sell a business.
Why not browse their marketplace and see if inspiration strikes? Or, if you're running an online store, blog, app, or website, head over to their website for a free valuation of your business’ market value.
We think this alone makes Flippa a useful and engaging resource for businesses and entrepreneurs alike!
Let us know how you get on in the comments box below; we'd love to hear from you!