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Business and Trade

How Much is Your Shopify Store Worth & How To Increase It

Shopify stores have become a very popular means of getting your products to a large customer base. In the age of social distancing, eCommerce has really taken on gigantic proportions by no longer being just a preference, but also the need of the hour for many shoppers. This has a direct result in the earning of Shopify store owners, which is bound to create some future-related questions in your mind. Is this a good time to encash your efforts? There may be other reasons as well, of course, which can get you to contemplate exiting your present business in order to explore newer pastures and adventures in life. An entrepreneur, after all, is always restless for more action.

Well, if you are intending to put your Shopify store for sale, then it is important for you to understand its current worth and how you can get it further up, in order to get the best deal in the selling process. Read on for some tips, in this regard.

How To Determine The Worth of Your Shopify Store – And Ways To Increase It

The first step towards understanding the worth of your Shopify store is to get a formal valuation done. Any professional will tell you, the most accepted principle for calculating the value is: ‘profits’ x ‘multiple’. 

Profits are fairly easy to ascertain and are the result of deducting all expenses from the income generated during the period. It is advisable to consider a substantial enough period to do this calculation, say, 12 months. This is deemed a fairly good reflection of the performance and resilience of your business. It is no surprise that any potential buyer will be primarily interested in the earnings and profits of your business before trying to put a price on it. However, the factor is known as ‘multiple’ is a bit more complex and depends on more than a simple mathematical calculation. In fact, this multiple is a collection of several factors that, together, determine the market value of your Shopify store. These factors include:

    • Age of Business: Age lends credibility to any business. It is commonly agreed that if a Shopify store is at least one year old, then it has seen enough ups and downs in market demands. The fact that it is still standing there, alleviates the potential risks in the minds of the buyers. Aged Shopify stores for sale are buyers’ preference. 
    • Nature of Business: Risk and cost are two of the primary aspects running around in most buyers’ minds. If you intend to put your Shopify store for sale, then you must think like a buyer and understand how to mitigate these anticipated risks. If the nature of your business is dependent on seasonal demands or if your sales see major swings based on events and occasions, they may be considered risky by buyers. Businesses with a regular income stream all year round end up getting higher value in the market.
    • Number of Products: Another deemed risk is relying heavily on a single product as your revenue source. Stores with diverse products catalog reduce this overreliance and help offset any issues regarding the demand and supply equation of the product in question.
  • Sources of Sale: Businesses with multiple sources of customer traffic tend to be valued higher. Just as dependency on a single product reduces the worth, similarly being dependent on a single source for selling products is not very desirable.
  • Online Reviews and Ratings: Brand recognition is a great way of increasing the worth of your Shopify store and also increasing your present customer base. In the case of online businesses, this is achievable through increasing online visibility and maintaining high customer ratings as received from your customers. Highly Rated & reviewed Shopify stores for sale have an upper edge over others.

Other Handy Tips

While we have discussed the most common factors that determine the worth of your Shopify store, and some simple ways to increase it, there are more professional actions that can be considered. Such as:

  • By engaging experts to conduct the valuation of your Shopify store, you can avail the benefits of their industrial experience, professional tools, and useful suggestions on ways to reduce value-reducing risks and tips to increase the overall worth.
  • Another benefit is that it will help you organize your financials and other details of your store, making it ready for listing in the market for sale. A true current picture is very important in order to take any rectification steps.
  • Using social media for free publicity or using paid online marketing ad campaigns to click-marketing can also increase the customer base and overall valuation.
  • Aim at diversifying your portfolio, and traffic sources in order to increase sales.
  • You may also consider brand-promotion experts or marketing campaign managers to provide you plans for a customer outreach program and advise on diversifying your inventory.

In Summation

Putting your Shopify store for sale requires a fair bit of planning and forward-thinking. The ideal first step is to understand your store’s current worth. Whether you use a professional service to achieve this or do it yourself, this entails organizing all your finances and statements. Refrain on a natural tendency of overvaluing based on emotions. Stay practical and carefully consider the factors described in this blog before putting your Shopify store for sale. It may be appealing to use short-stop solutions to mitigate risk which may be lowering the worth of your business presently since after the sale it is no longer your concern. But remember, this will negatively impact your credibility in the market and adversely affect your future enterprises. 


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