Knowing your business’s value isn’t just about selling. It’s about understanding what you’ve built—and what it could be.
Here are 15 FAQs that will help you see your ecommerce business through a buyer’s eyes.
Quick Answers (Top 5 Most Common Questions)
1. How do buyers look at my business?
They ask: “How much cash does this generate, and how risky is that cash flow?” The answer determines your value.
2. What’s the first number they look at?
SDE (Seller’s Discretionary Earnings). Your profit plus add-backs. It’s the cash available to whoever owns the business.
3. What’s the second number?
Your multiple. For most ecommerce stores, that’s 2.5x to 3.5x, adjusted for risk factors.
4. What makes a business “low risk”?
High LTV, diversified traffic, documented operations, 3+ years of history, and a team in place.
5. What makes a business “high risk”?
Single-channel dependence, low LTV, owner dependence, declining revenue, and messy books.
Advanced Valuation Questions
6. How do I calculate my LTV?
Average order value × purchase frequency per year × customer lifespan. Example: $50 × 4 purchases × 2 years = $400 LTV.
7. What’s a good LTV:CAC ratio?
3:1 or better. For every $1 acquiring a customer, they generate $3 in value. This shows healthy unit economics.
8. How do I improve LTV fast?
Post-purchase emails, subscription options, and loyalty programs. These can lift repeat purchases by 15-25% in 90 days.
9. Does my email list matter?
Enormously. An engaged list driving 20%+ of revenue is worth $1-$3 per subscriber. It’s proof of customer ownership.
10. What about my brand?
A distinct brand is a moat. It’s harder to replicate and worth more. Generic stores compete on price and get discounted.
Timing & Process Questions
11. When should I get a valuation?
Now. Even if you’re not selling. Knowing your number helps you make better decisions about where to invest your time and money.
12. How often should I re-value?
Every 6-12 months, or after a major change (new product launch, traffic shift, team expansion).
13. What if my valuation is lower than expected?
Don’t panic. Use it as a roadmap. Identify the weak factors and fix them. A lower valuation today can become a higher one in 90 days.
Risk & Red Flags
14. What are the most common weaknesses?
- No email list: You don’t own your audience.
- Paid traffic only: Revenue disappears when ads stop.
- Single product: One SKU = high concentration risk.
- No team: The business is a job.
- Messy books: Buyers can’t verify your claims.
15. How do I turn weaknesses into strengths?
Start with LTV. Then traffic diversity. Then documentation. Then team building. Each fix adds to your multiple and your sale price.
See Your Business Through a Buyer’s Eyes
