How to Determine What Your Business Is Worth (And Why It Matters Long Before You Exit)
The offer on the table is rarely the surprise—the surprise is what you think your business is worth.
We’ve seen it time and again: an owner who poured years of sweat equity into their business finally sits down to sell, only to hear a number that feels like a gut punch. The gap between perceived value and actual market value isn’t just disappointing—it’s avoidable.
Whether you want to exit in 3 years or 30, knowing what your business is worth (and what drives that number) gives you more options, more leverage, and more peace of mind.
Why You Shouldn’t Wait for an Exit to Know Your Value
A study by the Exit Planning Institute found that 80% of business owners don’t have a transition plan, and 75% regret selling within a year. Why? Because they didn’t go in with a clear understanding of what their business was worth or how to improve that value.
Owners who understand their valuation early:
Command higher multiples when the time comes.
Make better decisions today that build long-term value.
Avoid desperation deals when life forces a pivot (such as divorce, illness, or burnout).
You don’t have to sell to benefit from a valuation—you just have to be ready if life hands you a curveball.
3 Common Valuation Methods (And What They Actually Mean)
Let’s break down three simple ways to get a rough idea of your business’s value. These aren’t replacements for a formal valuation, but they serve as good starting points.
1. EBITDA Multiple
This is the most common method. It takes your Earnings Before Interest, Taxes, Depreciation, and Amortization and multiplies it by a factor based on your industry.
A solid, service-based business might sell for 3–5x EBITDA.
A SaaS business with recurring revenue might hit 8–10x.
Example: If your business generates $500K in EBITDA, and companies in your sector sell for 4x, your ballpark valuation is $2 million.
2. Revenue Multiple (Rule-of-Thumb)
This method is quick, especially for service businesses or early-stage companies.
Professional services often sell for 1–1.5x revenue.
Subscription-based models can fetch 2–4x, depending on churn.
Example: A consulting firm with $1M in revenue and stable client retention might sell for $1–1.2M.
3. Discounted Cash Flow (DCF)
This method projects future earnings and discounts them to present value. It’s less common for smaller private companies, but it gives insight into long-term profitability.
It’s helpful if you have strong forecasting and long-term contracts, but it usually needs a pro to model it out accurately.
Want a Better Number? Improve These 8 Drivers
This is where the Value Builder Score comes in. It’s a free 15-minute assessment that measures the 8 drivers of company value:
Financial Performance
Growth Potential
Switzerland Structure (no over-reliance on any one client, vendor, or team member)
Valuation Teeter-Totter (cash flow efficiency)
Recurring Revenue
Monopoly Control (your unique differentiator)
Customer Satisfaction
Hub & Spoke (does it run without you?)
Improving these drivers doesn’t just raise your valuation—it makes the business less stressful to run right now. Want to learn more about these drivers? Download a free copy of the 8 Key Drivers of Company Value ebook here.
Companies that score 80+ on the Value Builder Score are 71% more likely to receive above-market offers.
Your DIY Reality Check: 4 Numbers to Pull This Week
Even if you’re not ready to take the full assessment, start here:
Your last 12 months of EBITDA
Percent of revenue that is recurring
Your client churn or retention rate
Days you’ve been able to fully step away from the business
These numbers will give you a quick sense of how financially healthy, sellable, and scalable your business really is.
When to Bring in a Pro (and What It’ll Cost You)
There are 3 levels of outside help you might consider:
Business Broker Opinion of Value – Usually free or low-cost, often used to prepare for a sale.
Certified Exit Planning Advisor (CEPA) – A more strategic advisor who helps you improve value long before a sale.
Formal Appraisal – Often used for legal or financial purposes. Costs range from $5K–$20K, depending on complexity.
If you’re serious about growth, succession, or a future exit, a CEPA is often the best first step. You’re in luck! I happen to know a guy! (It’s me, I’m the guy.)
Ready to Know What You’re Really Working With?
You don’t have to guess. The Value Builder Score will give you clarity on where your business stands and where you can improve. It’s fast, free, and could be the most valuable 15 minutes you invest this year.
[Take the assessment] or book a no-pressure discovery call. Because the sooner you know your number, the sooner you can start building something even better.
