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Buying an ecommerce business – the role of profit vs revenue

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Sinopsis

When considering buying an ecommerce business, it's crucial to evaluate various financial metrics. In this article, we will explore nine vital financial metrics that potential buyers should assess when looking to buy an ecommerce business. Introduction Before diving into the financial metrics, it's important to recognize that buying an ecommerce business is a substantial investment. To ensure the success and profitability of your acquisition, you need to consider both financial and non-financial factors. Financial Metrics 1. Financial Metrics Trump Marketing Ones While marketing metrics are important, financial metrics take precedence. Understanding the financial health of the business is paramount. Key documents, such as the Profit and Loss (P&L) statement and the balance sheet, should be the first items you examine. 2. Profit, Not Revenue, Drives Value Growing revenue does not necessarily mean growing the business. Profitability is what truly drives the value of an ecommerce business. Even if a business