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Thread: How to convince the buyer there aren't hidden costs?

  1. #1
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    How to convince the buyer there aren't hidden costs?

    Hello EP,

    Clinton sparked a great idea for me to ask. As a BUYER in a deal, some may be skeptical of 'hidden costs' in an eCommerce project. In particular, I have an eCigs business I was selling and though I quoted 74% profit and make note that I use PRWeb and other reputable press services once per month, it might scare some people to think 'Could there be some other expenses' ?

    I have been selling since 2008 and a bit surprised that Clinton said this would be his red flag. I try to be very transparent on businesses I sell, so everyone walks away winning.

    What are some things you like to see in Flippa/Website Seller listings to eliminate this fear of 'Hidden Costs' associated with operating a website / eCommerce store ?

    What might trigger you to think there are some hidden costs in a post?


  2. #2
    Administrator Clinton is a Premium Member
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    It depends on the business model. Some models are more prone to the problem. A content site that gets 90% of traffic from Google organic and monetises via Adsense isn't a big hidden cost risk.

    If you're in a market where competitors advertise then you'd be suspected of advertising. One protection is to keep your raw logs meticulously so buyers can't inspect them for signs of bought traffic.

    If you have spikes in your traffic / earnings, those are red flags. Have good explanations ready for them.

    I've got to go now so won't comment any further and we'll see if others have any useful contributions to make. This is the kind of thread in which brokers who lurk and don't post from one month to the next can demonstrate their knowledge/expertise!
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

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    Moderator Kay is a Premium Member
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    This seems like a useful thread and it's a pity it got buried, so I thought I'd dig it up.

    What other "hidden costs" would raise red flags for you in a sales listing?
    British Expat - helping people to live and work abroad since the year 2000.

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    The obvious one: owner labor. This is especially true of ecommerce / dropship sites, and also sites that provide a service.
    Also, many sites are sold w/ the promise potential: "Just need someone more committed to take the site to the next level.."

    That's of course you writing content / SEO / lining up guest posters & advertisers, in general putting in the sweat equity that the present owner isn't currently doing.

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    If it's an e-commerce site that sells hard goods with variations (e.g. clothing sizes and colours) the coherence of the inventory that is included in the deal is important. If stocks have been run down, is it just the sizes and colours that don't sell that remain? Have any lines gone out of production? The cost in time and resource for re-establishing moribund supply lines is significant.

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