What Is My Business Worth? A Simple Guide for Business Owners
If you’re a business owner, chances are you’ve asked yourself this question at some point:
“What is my business actually worth?”
Whether you're actively preparing for a sale or just exploring your options, understanding the value of your business is one of the smartest steps you can take. Yet for many owners, business valuation feels like a black box—complex, confusing, and often avoided until it’s absolutely necessary.
We’re here to change that.
Why Business Valuation Matters
Knowing what your business is worth does more than prepare you for a potential sale. It helps you:
Plan your exit strategy with confidence
Understand what drives your value—and what drags it down
Make better strategic decisions for growth
Protect your wealth and legacy
Even if you’re not ready to sell for another few years, getting a baseline valuation now helps you identify strengths, weaknesses, and opportunities to improve your position before you go to market.
The Basics: What Buyers (and Valuators) Look At
Business valuation isn’t guesswork—it’s grounded in data. Here are a few key factors that influence what your business is worth:
1. Your Earnings
The most common metric used is either:
SDE (Seller’s Discretionary Earnings) for small businesses
EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization) for larger ones
Both measure your company’s true profitability, which becomes the foundation for value.
2. Industry Multiples
Different industries trade at different multiples. A well-established HVAC company might command a 3x multiple, while a fast-growing tech business might fetch a higher one.
3. Financial Health
Clean financials, consistent revenue, and minimal debt are attractive to buyers. Disorganized books? Not so much.
4. Operational Structure
A business that runs without the owner is more valuable than one where the owner wears every hat.
5. Growth Potential
Buyers want to see a future. Strong customer retention, diversified income streams, and scalable operations can boost your value.
What a Valuation Is Not
It’s not what you hope to get.
It’s not what your friend sold their business for.
It’s not what you’ve invested in the company.
It’s what a qualified buyer is likely willing to pay based on risk, return, and market conditions.
Can You DIY a Valuation?
You can try—but like diagnosing your own medical condition with Google, it’s risky. Online calculators can be helpful for rough estimates, but they don’t account for the unique nuances of your business.
A proper valuation looks at your specific financials, industry, market trends, and business structure. That’s why we always recommend starting with a certified valuation professional if you're serious about getting an accurate picture.
Get a Rough Estimate—Free
At North Kendrick, we offer business owners a complimentary Estimate of Value. It’s a simple, no-pressure way to get a general idea of your business’s worth and start the conversation about your goals—whether you want to sell next year or five years from now.
Schedule a call with us today.
Final Thoughts
Valuation doesn’t have to be intimidating. In fact, understanding your business’s value can be incredibly empowering. It gives you clarity, options, and the insight you need to plan your next move with confidence.
Because at the end of the day, your business isn’t just a number—it’s your legacy.
Let’s help you protect it.
