4 ms·

> $1M in annual revenue. > A month ago, I sold the company for $600k. ?????

• mtlynch 2y ago
  It's a hardware product, so profit is much lower than revenue. SaaS businesses can often sell as a multiple of revenue because they have relatively low costs, but with hardware, there's a lot of overhead.
• andrethegiant 2y ago
  > Sale price: $598,000 (2.4x annual earnings) Also confused here, the math doesn’t seem to be mathing up
  • runako 2y ago
    Revenue is $1m. Earnings are less than revenue, because you have to pay for salaries & stuff to generate the $1m in revenue. After expenses of ~$750k, the business earned roughly $250k in profit. Thats' real money the owner(s) could put into their personal accounts. Businesses are typically valued as a multiple of their earnings (in the stock market, this is the P/E ratio). For hardware/e-commerce companies, 2.4x is in the range of fair value. Again, you multiply by the earnings and not the revenue. That gives you the actual sale price.
• stevoski 2y ago
  Revenue, not profit.