I’m George Moulos from Ecommerce Brokers, I’m an online business broker that has been helping people build, buy, and sell online businesses for over a decade. 

Ecommerce-Brokers.com has sold millions of dollars worth of businesses and over $250,000 worth of businesses just on Flippa.

We also have videos about building, buying and selling online businesses on YouTube coming out every week and you can Subscribe Here!

1. Is Flippa a Broker? 2. Does Flippa Really Work? 3. What is Flippa and how does it work? 4. How do you get paid on Flippa? 5. How do you sell on Flippa? 6. Is it worth buying a website on Flippa? 7. Can you make money with Flippa?

1. Is Flippa a Broker?

No. Flippa is an online marketplace for buying and selling online businesses. The platform is 13 years old and has reportedly sold over $140M worth of businesses. 

2. Does Flippa Really Work?

In my experience Flippa is the best marketplace to buy a business under $250,000. They have been in the game longer than any other marketplace, meaning they have more data than any other platform and are the most well known place for buyers and sellers to go to. 

There are other marketplaces like Shopify Exchange Marketplace, MicroAcquire and Biz Buy Sell. However they either suffer from a lack of quality, a lack of buyer and seller vetting or simply haven’t been around as long.

You’re going to want to set up your account first. Over the years Flippa has really progressed with how much they vet buyers and sellers and as you can see from the setup process, they do ask for quite a bit of information. Depending on how much information you provide them, the platform and the sellers/buyers you interact with will give you different levels of confidential information. In other words, the more details you provide about who you are, what you want to buy or sell and how you plan to finance your acquisitions, the more information that will be provided to you by Flippa and sellers and buyers. 

3. What is Flippa and how does it work?

Step 1: How do you Find Businesses on Flippa?

  • As a first time buyer you might have an idea of what type of business you want to buy and how much you want to spend. But you might also be flexible on both of those items. If you’re open to seeing what is out there you can just scroll down the listings page in reverse-chronological order to see what are the most recent and fresh listings and see if anything sparks your interest.I would say that starting with at least a budget and a type of business is best. For example, You might have a budget of maximum $50,000, meaning you could be able to afford a business worth $100,000 through seller financing, an SBA loan or earn out.
  • Now, you have a budget and you need to choose what type of business you want to buy. I would base this decision on your experience and what you find to be most familiar and comfortable, because remember you’re going to have to operate or at least manage this business and if this is your first acquisition it is best to play it safe and work with something you know. So I’m going to choose revenue generating, because I want to buy a business that’s making money not losing money and then I’m going to choose Ecommerce and all the categories that come under that as it’s where I have the most experience. 
  • When I’m looking to buy on Flippa I always go from the most expensive to the least expensive and start scrolling from there. The thing you want to do is start looking for indicators of a good business as you scroll down the page. For me the first thing I always look for is Net profit. If it’s not making a profit it is almost definitely not something I’m going to be interested in, unless you’re looking to fix it up.
  • The next thing is the site age. Myself and my buyers don’t really buy anything under a year old. My sweet spot is over 2-3 years old so that the brand at least has built up some brand recognition and gone through the initial growing pains that every business must. Then I look at the multiples. The profit multiple shouldn’t really ever be over 5X, especially when you’re looking at businesses valued under $1M. If it is over 5X the seller likely is inexperienced or is going to be too difficult to negotiate down to a reasonable price.
  • The revenue multiple is not important because we are looking at businesses, not startups. Based on this quick process I can spend 5-10 minutes choosing a few businesses to analyze and open them up in other tabs, and I’ll start digging into the information provided on the listings and seeing if it’s a good fit for me. If I like the business I’ll contact the seller.

STEP 2: How Do You Communicate and Negotiate with a Seller?

So you’ve found a few businesses that are within your price range, they are in the specific category of online business that you like whether it be Ecommerce DTC, FBA, content sites, KDP, SaaS or Apps and after reviewing the listing you want to take the next step.Now you need to communicate and negotiate with the seller. There are a lot of different types of negotiation methods that you can use but I’ll leave that to some of the great books which you can view on our site Ecommerce-Brokers.com. To keep it simple I would start with some questions about the specifics of the business. How do they drive traffic, how do their logistics work, why do they want to sell, how quickly do they want to sell.

Then you can progress to asking them for access to Google analytics so you can start seeing if what they have presented is true and if they have perhaps boosted any of their data, which is rare, but does happen. You’ll also be able to see if there were any big upswings or downswings in their business and ask intelligent questions about why they happened, which will also dictate what your post-acquisition plan is.

Now that you’ve got a thorough understanding of the business and done your due diligence, which is an entire world of its own, now you can now negotiate on price and terms. So firstly you want to ask how they came to their valuation and if they would accept something like 30-40% less. This will give you a clear idea on how much they are willing to move on price, without insulting them. Following up on this by asking them if they are willing to accept less for a fast transaction, is another way to knock up to 20% off the sale price. Now you can talk about structure. This is where you can really get a lot of value for money. Before covid earn out and seller financing wasn’t as popular as it is now, but now it is used in almost 70% of deals. Ask the seller if they would accept an earnout over a year, a normal period of time for a $100,000 business. In an earn out scenario, for example you might pay $50,000 in cash upfront and pay $50,000 over a year. That last $50,000 in earn out depends on the business achieving an agreed upon revenue figure each month or quarter. If the business does not reach the figure over the selected time period a reduced amount is usually paid in earnout by the seller to the buyer. In some cases, there is also an upside if the business achieves greater revenue than the agreed upon revenue figure. 

STEP 3: How do you Close a Deal?

So you’ve found your agreed upon price and structure. You’ve had a few calls and you want to move forward.The next steps are to sign a Letter of Intent to confirm your intention to buy the business and conduct due diligence over what is usually a 30-45 day period. These letters of intent also give you exclusivity to buy the business during this period, but does not mean you must buy the business, nor must the seller sell to you, but only that they are only talking to you to buy the business and that they will help in providing information for the business.

4. How do you get paid on Flippa?

While you’re finishing your due diligence your lawyer or attorney should be drafting a sales agreement or asset purchase agreement. Before the end of your exclusivity period you should have sent over the Sales agreement to the seller and probably gone back and forth a bit on terms and conditions.After that due diligence period you sign the agreement and pay, at least the upfront portion of the deal. You can pay the seller directly, or use a platform like Escrow.com that is super safe for both parties.This is where Flippa will take a percentage of the transaction. Currently I believe that it is 5%

How do you sell on Flippa?

STEP ONE: How do you List a Business on Flippa?

The selling process is a little different as you can imagine. The first step is to actually list your business which is a relatively smooth process. Just like when you’re buying you’re going to have to provide as much data and information about yourself and your business as possible.

The more data you provide the more Flippa will promote your business and the more buyers will trust and want to buy it. As you can see I’m listing a new business and each step is very intuitive. You can link Google analytics, Shopify and a list of other platforms which will incentivize buyers to want to acquire your business. I usually use Canva to generate a nice banner and I provide as much data as possible.Now that you’ve filled out all the information that you can on the listing you can choose what tier you’d like to use. Each tier essentially means you will get more or less visibility by Flippa’s audience and buyers.  You can of course also use a broker on Flippa, or outside of Flippa.

Flippa has a few highly vetted brokers that also use their marketplace to sell, and Flippa can refer you to these brokers for a premium concierge service as well as to reach the brokers network. My biased opinion is that Ecommerce-Brokers.com is one of the best in the world, but, that’s just my opinion, you can of course visit their site, our site through a link in the description below.

STEP 2: How Do You Communicate and Negotiate With a Buyer?

So you’ve listed your site, chosen a tier of visibility and you’re getting views to your listing. Buyers are commenting and contacting you. What do you do next?You want to communicate and provide as much information and details as you can to buyers’ questions. Push for a video call so you can show that you and your business is legitimate and all the data you provided is legit. I usually request an NDA be signed before providing confidential information, if not earlier.

During negotiation you should of course push for the high valuation possible. Your valuation should of course be realistic and reasonable. If you’re looking for a fair and reasonable valuation you can use Flippa’s valuation app but also get a second opinion from someone like us at Ecommerce-Brokers.com. If your valuation is based on data and given by a reputable company like Ecommerce-Brokers.com, Flippa or another broker, and your business is at least a year old, and is stable and or growing, you likely shouldn’t move too far away from your valuation. Meaning not more or less than 15-20%. In terms of seller financing and earn out, they are there for the buyer to mitigate risk so are less preferred by sellers however, they are usually the structures that get deals across the line. 

STEP 3: How Do You Close a Business Sale?

So you’ve agreed on a price and structure. You want to get your attorney or lawyer to now review the LOI and sales agreement for the sale of your business. This is doubly important when you have a seller financing or earn out agreement as there’s more risk for the seller. If you’re looking for a good ecommerce focused lawyer contact me via the Ecommerce Brokers site below and we can send you in the right direction.

During the due diligence period you will be providing all the information you have on your business, including financial history and even tax returns so it is important your NDA and LOI are water tight.After DD it’s time to sign the sales agreement and receive payment. 

This is where Flippa will take a percentage of the transaction. Currently I believe that it is 5%

Is it worth buying a website on Flippa?

If this process seems like a lot to you, don’t worry that’s what a Broker is for. A broker, like Ecommerce Brokers will charge you a few percentage points more, usually 10% and take care of this entire process from start to finish.

At Ecommerce-Brokers.com we bring our over 10 years of experience to each translation which means we have a huge list of buyers, and of course have the experience to get the deal done. 

Can you make money with Flippa?

After doing over $250k in sales on Flippa and using the platform for over 3 years I give Flippa a 8/10. It does a good job of what it sets out to do. It shows a good array of businesses to buyers every week, especially in the sub $250k range. 

We also have videos about building, buying and selling online businesses on YouTube coming out every week and you can Subscribe Here!