Common answers to your questions
What does FlipSite do?
We do two things:
#1: We have our own portfolio of businesses and we’re always looking to add more to the fold. FlipSite aims to offer a fast and easy way to sell local, primarily-online businesses. So basically, through FlipSite, we get first dibs on buying businesses that come to FlipSite to be sold.
#2: If we choose not to buy a business (this could be for several good reasons- eg: We don’t have enough cash at the time/it’s not a good industry fit for our group/it’s not making enough profit for our group/we just have too much on our plate) then we will advertise the business to our curated list of buyers.
What makes a business ‘sellable’ on this platform?
Think of it like preparing a meal for a braai. Your business should be appetizing (profitable), smell good from a distance (have a good online presence), and be ready to eat (have clear financial records). If your business ticks these boxes and makes between R5,000 and R100,000 profit per month, it’s as sellable as boerewors at a rugby match.
Can I buy a business if I’m not South African?
Nope. We want to keep the process as simple as possible from a legal point of view, and we want to keep it proudly South African. We want to keep the profits within our borders. We will buy South African-based businesses from anyone, anywhere but we will only sell them to locals.
What if my business isn’t making a profit?
Our main focus is on selling profitable businesses, so investors can add them to their portfolios, and first time buyers can buy something healthy, with a good history.
That said, it does happen that a project just hasn’t had enough time or resources thrown at it to get it to profitability. If you have a business to sell that isn’t profitable, but has a lot of promise, contact us with the details, and let’s see if it’s something we would be interested in, or could find a buyer for.
Just bear in mind that a business with months of profitable history is FAR more valuable than a non-profitable one that is being sold on hopes and dreams of becoming profitable. One is a sure bet, one is a gamble. Sure bets get good valuations. Gambles get a fraction of this.
Can I pay the business off?
In most cases, no. Unless a seller has told us they are open to seller financing, then it will be a straight cash deal.
Our site specialises in smaller deals, where the business operations and legal considerations of sale are far simpler. This keeps our buying and selling process fast and easy. Our site’s selling prices typically range between R120k and R2.4m.
Open finalising the sales agreement, the buyer will put the money into escrow (escrow fees to be split by the buyer and seller) and once all the assets have been transferred, the funds will be released to the seller.
So if you want to buy a business through FlipSite, please ensure you give us your actual budget – where you have the funds available, or at least accessible, to conclude a purchase within 30 days.
What does it cost to sell on FlipSite?
If FlipSite buys your business, there is obviously no fee charged.
If we don’t buy the business and you agree to let us help you sell the business, we will hold your hand through the process and help find you the perfect buyer.
If our efforts result in you selling the business, we only charge a 5% + VAT cut of the VAT-excl. sales price. It’s lower than the industry standard and we aim to make the process as fast and easy as possible.
How do you ensure the businesses listed are legitimate?
We’ve got a team of cyber sleuths who are more thorough than a mother-in-law at a Sunday lunch. They vet each listing with a fine-tooth comb for authenticity, profitability, and legality. Only businesses that pass this intense scrutiny are listed, ensuring you don’t end up buying a digital lemon.
What do you mean by “monthly profit”?
We mean the monthly profit that’s left over after all the expenses have been paid.
We do understand that small business owners often “live” out of their business and as a result there may be add-backs to the P&L. You can send us a list of add-backs, or even better, a detailed spreadsheet.
Eg: If you have a team running the business without you but you take a salary and spend on fuel (which are not needed for the running of the business) then these expenses can be added back to the profit, which will help you get more for your business.
The short version: If any expenses won’t move over to the new owner, remove them from your expenses and note this for us, so we can accurately evaluate your business’s value.
What happens after I buy a business?
After the digital ink dries on the deal and you’ve made payment, you’ll be given the keys to your new digital empire. All IP, websites, SM accounts, inventory and other relevant assets will be transferred to you buy the buyer. Part of the deal will include training from the buyer, ensuring you know how to run the business as well as they did.
We’ll keep the funds in escrow and once the transfer and training has been completed, the funds will be transferred to the seller.
How much should I ask for my business?
Investors buy because they are going to get a return on investment. Most of our buyers are looking make back their investment in a 12 to 24 month period. That means they would be willing to pay 12x to 24x the monthly profit of the business + inventory value, if relevant.
But, very importantly, values differ wildly between different businesses.
Example: A business makes R20k per month but the owner is doing all the work. The seller might want to sell this for R480,000 (24x) but an investor would need to either put their time into running the business or employ someone to do it. This means some types of buyers (investors, serial entrepreneurs) would not see the business as having the same value as the seller sees. This kind of buyer would have to factor in the cost of their time or a manager’s salary, which would bring down the monthly profitability and affect how much they are willing to pay for the business.
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The short version: A business that largely runs itself, or has an effective team that runs it, is worth far more than an owner-run business.
Still, even if you have an owner-run business, we can try to find a buyer who is looking to put all their time into the business and wouldn’t view this as a negative.