Estimate the Value of Your Business: A Practical Guide for Owners

Most business owners know their revenue. Many can quote their margins. Some even track cash weekly.

But when you ask, “What is my business worth?” the answer is often a guess.

That’s a problem, because your business value quietly influences almost every major decision you make: when you can step back, how you plan for retirement, what you do with unsolicited interest from buyers, and where you should invest your time and money to grow.

Why value matters (even if you’re not selling)

If you’re not planning to sell today, it can feel easy to put valuation in the “someday” category.

In reality, understanding your value is a practical tool for everyday decisions, not just an exit event. Owners use valuation to:

• Respond calmly to an unsolicited offer instead of negotiating off a buyer’s number.
• Benchmark progress as you grow, hire, expand locations, add equipment, or launch new services.
• Plan for retirement and financial security with a realistic target, not a hope.
• Support buy-sell agreements, succession planning, or family planning with a current value reference.
• Avoid surprises when the day comes that you actually want to sell.

Put simply: you can’t improve what you don’t measure. Business value is a measurement that matters.

What actually drives business value

There are many valuation methods, but in most real-world transactions the logic comes back to a few core questions:

• How much reliable earning power does this business produce?
• How risky is that earning power?
• How transferable is the business to a new owner?

Earnings: the “cash flow engine” buyers pay for

Most buyers are purchasing future cash flow. That’s why valuation often starts with an earnings metric (commonly SDE for smaller owner-operator businesses and EBITDA for larger, management-run companies).

The important idea is simple: buyers want to understand what the business earns after you remove one-time items and separate business expenses from personal or non-recurring costs.

Risk: what could cause earnings to drop?

Two businesses can have the same earnings and very different values. Why? Risk changes the multiple. Examples include:

• Customer concentration: one customer represents a large percentage of revenue
• Owner dependency: the business relies heavily on you to sell, manage, or produce
• Margin volatility: profits swing year to year based on a few variables
• Limited differentiation: buyers see the business as “replaceable”

Transferability: can the business run without you?

Transferability is where many owners unintentionally lose value. Buyers pay more when the business has:

• documented processes
• repeatable sales and marketing
• a stable team
• clean financial reporting

Market conditions: value is affected by forces outside your control

Even well-run businesses are impacted by the financing environment, buyer demand, and broader economic conditions. That’s why it’s smart to monitor value over time rather than only checking it when you’re ready to sell.

Common valuation mistakes owners make

These are the patterns we see most often:

1) Relying on rules of thumb

Multiples can be a helpful starting point, but they’re not a valuation. Multiples move based on industry, scale, risk, buyer demand, and how transferable the business is.

2) Using tax return numbers without recasting

Tax filings are built to minimize taxes. Buyers price businesses on economic reality. That difference matters.

3) Treating a buyer’s offer like a valuation

An unsolicited offer might be market validation. It’s not a market price. A buyer is paid to buy well, not to educate you on the true value of what you built.

If you’ve received an unsolicited offer, your best next step is to anchor yourself with an independent valuation before you share details or react emotionally. If you want a deeper playbook, read: The Hidden Cost of “Yes”: Why Every Unsolicited Offer Needs an Independent Valuation.

EOV vs. BAMA: which one should you get?

At DealCoach, there are two ways to get clarity. Both start with understanding what your business is worth. The difference is how far you want to take the analysis and how you plan to use it.

Option 1: Estimate of Value (EOV)

An Estimate of Value (EOV) is a market-based business valuation that identifies the fair market value of your company and gives you a realistic estimate of what a qualified buyer would pay in today’s market.

Choose an EOV when you want a clear value anchor for decisions like:

• responding to an unsolicited offer
• planning for a sale in the near term
• setting an asking range with confidence
• obtaining lender financing or internal planning

Option 2: Business and Market Analysis (BAMA)

A Business and Market Analysis (BAMA) includes the valuation benefits of an EOV, and goes further with a salability assessment and benchmarking.

Choose a BAMA when you want to answer two questions:

• How much would I get if I sold?
• What should I do to increase that number over the next 1–3 years?

Owners often choose BAMA when they’re not ready to sell today, but they want to build value on purpose and be in control of timing later.

How to use valuation to grow value

A valuation is most useful when you treat it like a starting point, not a finish line.

Here are three practical ways owners use an EOV or BAMA to improve outcomes:

1. Set a real target. If you want a specific retirement outcome, you need a real baseline and a real gap analysis.
2. Focus on a few levers. Value rarely improves from doing 20 things halfway. It improves from doing 2–3 things very well.
3. Re-check value periodically. Markets change, industries change, and your business changes. Monitoring value keeps you prepared.

FAQ

Is an EOV the same thing as a business valuation?

An EOV serves the same purpose as a business valuation for most owner decisions: it identifies fair market value and provides a realistic estimate of what a qualified buyer would pay in the current market.

When do I need a certified valuation instead?

If you need a valuation specifically for legal disputes or IRS audit requirements, you’ll likely need a certified valuation built for those purposes. For many planning and sale decisions, an EOV or BAMA is the more practical tool.

What if I’m not ready to sell?

That’s often the best time to get a BAMA. You get today’s valuation plus benchmarking and action steps to improve value long before you’re under pressure.

How often should I update my valuation?

Many owners use valuation as a regular check-in, especially as financial performance, team structure, and market conditions change.

What’s the best next step if I got an unsolicited offer?

Don’t rush to “yes” or “no.” Start by getting an independent valuation so you can respond from a position of clarity. Then decide whether to create competition and explore options.

About the Author

Dan Hansher

Dan Hansher is a Co-Founder of DealCoach & an Investment Banking Associate at Cornerstone Business Services, specializing in Main Street and Lower Middle Market M&A advisory. With 100+ business valuations completed and extensive marketing leadership experience, he brings a rare combination of financial analysis and operational expertise. Dan has led major brand integrations, including a $2B acquisition, driven digital transformation initiatives, and developed brand positioning strategies across multiple industries. He helps business owners understand what drives value and prepares them for successful exits. Dan holds an MBA from UW-Whitewater and specializes in translating complex financial concepts into clear, actionable strategy.