Home – New Forums Starting your journey Selling Ebay business/hobby/idea – value?

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  • #990546
    B-M
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    Twelve months ago I imported some products from different manufacturers related to the marine industry as a trial (and a bit of fun). I sell them on Ebay and in local online classifieds.

    I’ve since become the Australian distributor for one of these manufacturers and am in the process of making myself official (ABN, website, etc). Essentially I am moving from what was intended to be a hobby and pocket money to something more substantial (and professional of course). I’m pretty busy as you would expect, however won’t say it’s a success as its very early days.

    One of the other products I tested has similar potential but as I don’t really have the time or money to invest in it’s development I was thinking of selling the remaining stock along with the manufacturers contact details, the couriers I use for delivery, the Ebay account (if I can), etc as a basic package.

    Essentially what I am selling is an idea or “potential business” as there is no ABN, website or anything else and just a little bit of stock. It’s all a bit rough and manual though only equates to a couple of hours work a week. Turnover is about $8k a year with about 50% profit.

    I have no idea what such package is worth and just priced it at the wholesale value of the remaining stock. I got 6 expressions of interest in 2 hours so pulled the ad. It was quite unexpected as I had previously tried to sell just the excess stock at a far cheaper price with no interest. I’ve since put a new ad up with a higher asking price and still received a few EOI over a couple of days.

    My question is how can I value, and eventually sell what is basically only a potential business as there is no ABN, etc?

    Any thoughts welcome as I’m a bit lost.

    Cheers

    #1177446
    Rowan@quaotic
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    Can’t really answer your question but I do know that is is not allowed to sell an Ebay account in their terms.

    #1177447
    Hatching_It
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    Whilst I’m not sure if it’s in eBay’s T+C’s I do know of quite a few people that flip eBay accounts by splitting out niche’s from their product range, building the new account over 12 months and then selling it.

    From what they’ve told me you’re normally looking at anywhere up to 3 x annual profit + stock.

    So if you’ve got a few grands worth of stock and are going to provide everything necessary to continue the business as is (accounts, contacts, processes) it’s probably worth $15-$20k?

    Personally, I’d be interested in buying your stock and wholesale contact from you so feel free to reach out if that’s interesting but I’d say you’d get more money from someone looking for the whole shebang (although you’d likely have to provide more after sales support to them)

    Here’s an example – http://australia.businessesforsale.com/australian/Ebay-Online-Home-Business-Includes-Website-And-Distribution-For-Sale.aspx This is from arguably Australia’s number one eBay guru (he mentored me for 6 months when I started out)
    Maclean

    #1177448
    bb1
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    B-M, post: 206655 wrote:
    My question is how can I value, and eventually sell what is basically only a potential business as there is no ABN, etc?

    Cheers

    First I would be very careful as you seem to be under the impression that becuase you dont have an ABN you are not a business. I think that you will find from the detail you have given here, if you used the ATO’s eveluation of business or Hobby you would come up as a business.

    An ABN does not make you a business, and unless you are turning over $75K a year, you dont legally need an ABN to run a business.

    If you are now trying to sell it, and from you have said here, you are, than you are a business, and subject to normal taxation, etc.

    #1177449
    Hatching_It
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    bb1, post: 206688 wrote:
    An ABN does not make you a business, and unless you are turning over $75K a year, you dont legally need an ABN to run a business.

    I think you’ve confused an ABN and registering for GST.

    You need an ABN if you’re operating as a business (intending on making money)

    You need to register GST when you foresee turning over $75k+ in a financial year.

    #1177450
    Anonymous
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    bb1, post: 206688 wrote:
    First I would be very careful as you seem to be under the impression that becuase you dont have an ABN you are not a business. I think that you will find from the detail you have given here, if you used the ATO’s eveluation of business or Hobby you would come up as a business.

    An ABN does not make you a business, and unless you are turning over $75K a year, you dont legally need an ABN to run a business.

    If you are now trying to sell it, and from you have said here, you are, than you are a business, and subject to normal taxation, etc.

    I’ve considered the hobby vs business question and also went through the ABR assessment for registering an ABN.

    Generally it seems I am borderline but when completing the ABN assessment I actually fell into the category of not being a business. It’s a bit of a conundrum because I could be considered as running a business and thefore committing a tax offence, but if the ATO decides that I am not runing a business but have registered for an ABN I am also committing an offence.

    #1177451
    Anonymous
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    Hatching_It, post: 206685 wrote:
    Whilst I’m not sure if it’s in eBay’s T+C’s I do know of quite a few people that flip eBay accounts by splitting out niche’s from their product range, building the new account over 12 months and then selling it.

    From what they’ve told me you’re normally looking at anywhere up to 3 x annual profit + stock.

    So if you’ve got a few grands worth of stock and are going to provide everything necessary to continue the business as is (accounts, contacts, processes) it’s probably worth $15-$20k?

    Personally, I’d be interested in buying your stock and wholesale contact from you so feel free to reach out if that’s interesting but I’d say you’d get more money from someone looking for the whole shebang (although you’d likely have to provide more after sales support to them)

    Here’s an example – http://australia.businessesforsale.com/australian/Ebay-Online-Home-Business-Includes-Website-And-Distribution-For-Sale.aspx This is from arguably Australia’s number one eBay guru (he mentored me for 6 months when I started out)
    Maclean

    Hi, thanks for your reply and interest.

    If it sold for between $15-20k I would be astounded (and very pleased of course) as it’s not like alot of work was put in (or is currently required).

    #1177452
    Anonymous
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    I’ve decided to put some figures up. Please feel free to comment regarding what the business/hobby could be worth if sold, as well as general commercial viability. It will be good feedback for my other project which is being launched as a business.

    Figures:
    – Ebay cost price – $25.01
    – Ebay and Gumtree selling price – $49.99
    – Cheapest competition physical store = $74.95
    – Cheapest competition online = $59 (they have high courier fees) otherwise $65.
    – single product with 160 sold over 12months (average 3/week)
    – weekly time expenditure >2 hrs

    The Ebay cost price includes all freight charges to Australia, customs charges, bank charges, duty, GST, Ebay and Paypal fees. Packing and stationary costs are included in the courier fees charged to the customer. (Charged at cost).

    Possibility to expand to 3 or 4 other models which could double quantity sold, as well as increase overall price.

    #1177453
    ThexArm
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    There are a lot of things to take into consideration when one want to evaluate a business for purchase / sale. Things like age of the business, number of products, brands, patents/trademarks (if any), market size, market position, business year on year growth, market year on year growth, new product development, capability, personnel, books & history, operating procedures etc. the list is pretty huge. Based on that one calculates how many times current year profits equal to the business worth.

    In your case, you have an idea and you have tested it in the market. There seems to be some interest and potentially grow if required effort is put in. But, we don’t know that part. You also have found suppliers. You also have competitors. Interesting thing in your numbers is your sale price of your product. When your nearest competitor sells the similar product for $59, why would you sell it for $49.99.? I mean you can easily increase the price closer to your competition. There is extra profit to be made for the same efforts.

    So, if you can forecast the sales based on your experience to next couple of years and look at the expenditure you need to hit those sales numbers then that would give an indication of your potential profitability. Since there isn’t much history to your idea it would be difficult to fetch thousands of dollars.

    I think it could be a nice addition to some business. Or may even be to your competitor?

    #1177454
    bb1
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    Hatching_It, post: 206707 wrote:
    I think you’ve confused an ABN and registering for GST.

    You need an ABN if you’re operating as a business (intending on making money)

    You need to register GST when you foresee turning over $75k+ in a financial year.

    No confusion at all, a fact that even a lot of accountants are not aware of is that an ABN is not compulsory to run a small business. It only becomes a compulsory requirement if you are over 75K or want to register for GST.

    I am not saying you shouldnt get one, in fact I would suggest that you do as there are withholding requirements and other factors in not having one. But it is not compulsory.

    And the fact still remains if you have not obtained an ABN it still doesnt mean that in the view of the tax office you are not running a business. If you are importing goods with the intention of making a profit, and even going to the extent of selling you Ebay store, well I dont need to say much more. You dont become a distributor as a hobby.

    #1177455
    Anonymous
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    ThexArm, post: 206741 wrote:
    Interesting thing in your numbers is your sale price of your product. When your nearest competitor sells the similar product for $59, why would you sell it for $49.99.? I mean you can easily increase the price closer to your competition. There is extra profit to be made for the same efforts.

    Hi, many thanks for your comments :)

    Of course I could charge more but that is one of the reasons why I considered it a hobby and not a business…it wasn’t all about making money…one of my customers repairs old boats and sells them at cost to retirees who would otherwise never be able to afford one.

    Interestingly the product I sell used to cost $90 to $100 before I came along. From a competition perspective my price now may be considered anti-competitive.

    #1177456
    ThexArm
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    Agree it is not about money all the time.

    #1177457
    Hatching_It
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    bb1, post: 206746 wrote:
    No confusion at all, a fact that even a lot of accountants are not aware of is that an ABN is not compulsory to run a small business. It only becomes a compulsory requirement if you are over 75K or want to register for GST.

    Very interesting! Any links etc to ATO information on this? I couldn’t find any.. (Not arguing the point, would just appreciate some official info)

    B-M I’m still interested :)

    #1177458
    bb1
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    checkt the abr website, im in Adelaide and dont have my laptop so its hard getting links and that when mobile.

    #1177459
    ThexArm
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    It is interesting and I am also little bit surprised that ABN is not compulsory.

    http://www.asbc.gov.au/resources/faq/do-i-need-ab

    Do I need an ABN?
    An ABN is not compulsory, but it does allow you to:

    facilitate a single Business Activity Statement (BAS)
    confirm your business identity to others when ordering and invoicing
    avoid Pay as You Go (PAYG) tax on payments you receive
    claim Goods and Services Tax (GST) credits
    claim energy grants credits
    obtain an Australian domain name.
    Registering an ABN is a separate process to registering a business name.

    For further assistance, contact the Australian Business Register on 13 92 26.

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