How to verify an ecommerce business earnings?

**ezultrasound** · February 20th, 2011, 3:06 PM

[[Split post from here as it was off-topic for that thread - Clinton, 21 Feb 2011]]

Just curious, how do you go about verifying an ecommerce business's earnings? Most of the small online business for sale that I've come across do not have professional financial statements. Are their excel profit sheets a reliable method of verifying their income?

**Denny** · June 8th, 2011, 1:54 PM

The only ways I know of verifying income from any business (including websites of any kind) are;
1. Bank statements
2. Financial statements that have been certified.
3. Income tax returns.
Bottom line: If you're not satisfied or don't believe what they're giving you, move on to another potential site.

**Clinton** · June 9th, 2011, 3:20 AM

Almost all sites sold in the popular marketplaces have NO bank statements, audited accounts or income tax returns to prove their figures.

You need to learn how to verify earnings without those documents.

Perhaps that's why you've been having no luck with finding a site to buy.

**golles** · June 9th, 2011, 6:32 AM

assuming this thread is related to ecommerce in the most traditional sense - selling products over the web (as opposed to publishing or a rough generalisation of the term ecommerce). That being the case....

as a starting point - most ecommerce systems will have an 'orders received' section. i guess if you are at the point of looking at financials then you will have signed an NDA and been given access to the ecommerce admin section - you should then be able to see orders placed. Most systems allow you to run reports on the orders to give you sales totals etc.

You should also be able to see the IP address the order was generated from - cross check these are different order.

From this data you should be able to correlate ecommerce transactions with credit card merchant account statements, paypal statements etc. which the seller should provide for you.

You should also be able to correlate orders received back to analytics (site visitors, ecommerce transactions etc).

some of this data can be forged so be careful, but it is a good starting point.

**Thomas** · June 9th, 2011, 9:58 AM

Originally Posted by Clinton

Almost all sites sold in the popular marketplaces have NO bank statements, audited accounts or income tax returns to prove their figures.

Quite a few do (especially if they have a LLC/Ltd etc), they usually just don't provide it for privacy reasons on a public marketplace. At least that's my experience.

Do you see any issues with sellers providing merchant account statements as proof? Are these harder to verify than bank statements, for example?

**Clinton** · June 9th, 2011, 10:23 AM

meathead1234, I didn't mean that they don't provide it in public, I meant that they don't have them. Only a minute percentage of listings in Flippa are from registered companies with proper financial records.

**Denny** · June 9th, 2011, 2:16 PM

Clinton: I would love to learn how to verify earnings without bank statements etc. I've been a businessman for over 30 years (granted not in the internet), but I don't know of other ways to verify earnings of an internet business. The reason I'm having trouble finding a site to purchase is; I haven't found a site to purchase on any of the "site for sale" sites as of yet. In fact, I've gotten 3 viruses over the past 3 months from sites like flippa & websitebroker when I've checked a potential site out. Another problem I've run into is some of my inquiries aren't even asnwered. But any suggestions for verifying income etc on a potential site would greatly be appreciated.

**Clinton** · October 11th, 2011, 12:42 PM

Denny, I just replied to your email. Anyway, if a seller doesn't answer your enquiry don't bother with him, move on!

The reason I'm having trouble finding a site to purchase is; I haven't found a site to purchase on any of the "site for sale" sites as of yet.

It takes a lot of time and effort to trawl through the dross there. What you can do is weed out all the new sites, non-earning sites, obvious scams, heavily hyped listings etc., choose one or two potential purchases, and start threads in the due diligence section on these forums. Depending on where and how the site is earning money I'm sure we could come up with some suggestions for verifying income.