Show Me the Money: How to Actually Know What Your Business Is Worth

Let’s be real…most business owners pull their “valuation” straight out of thin air.

You’ve heard it before:

“My business? Easily worth a few million.”

Cool. Based on what, your gut? Your QuickBooks file from 2019? Your cousin’s “friend in finance”?

Here’s the thing: your business has a real, measurable value. You just might not like the number… yet.

What a Valuation Actually Does (And Why You Need One Yesterday)

A business valuation is like that brutally honest friend who tells you exactly where you stand, no sugarcoating. It’s not about inflating your ego; it’s about understanding your business inside out.

Whether you’re planning to sell, bring in investors, or just want to know if you’re sitting on a gold mine or a ticking time bomb, a valuation is your roadmap.

And before you roll your eyes and say, “I’m not selling anytime soon,” remember this: you don’t check your credit score only when buying a house, right? (At least, you shouldn’t.)

A valuation helps you:

• Spot weak points before buyers (or lenders) do.
• Track growth year over year with real numbers, not vibes.
• Prepare for the unexpected, because you’re not immortal.
• Make smarter moves about taxes, equity, and succession.
  
  

The Numbers Don’t Lie (Even If You Wish They Would)

Let’s drop some context:

• The average small-to-medium-sized business in the U.S. is 24 years old—which makes you a certified survivor in a world where half of all new businesses die within five years.
  
  
• By contrast, the average company in the S&P 500 is just 18 years old—down from 61 years in 1958. Translation: big corporations burn out faster than your last intern.
  
  

Longevity is one thing. Value is another.

Among businesses with over $1M in revenue and $500K+ in seller’s discretionary earnings (SDE), the mean equity value is around $9.97M… but the median sits at just $2.3M.

That’s a polite way of saying: a handful of big fish make the pond look deeper than it is. Most small business owners are worth less than they think—and the gap between perception and reality can be brutal.

What Really Drives (or Destroys) Value

Let’s talk risk, because that’s what every buyer, investor, and banker is really looking at.

Here’s what moves the needle:

✅ Predictable Revenue Streams
Recurring, diversified, and reliable income makes you less risky. Monthly retainers? Subscription models? Contracts that renew automatically? Gold stars across the board.

❌ Overdependence on the Owner
If your company collapses the second you take a vacation, guess what, it’s not worth much. Nearly 40% of businesses say losing the owner would cause a noticeable revenue drop. That’s not a “valuation haircut.” That’s a buzzcut.

✅ Healthy Customer Mix
If one client makes up 60% of your revenue, congratulations. You work for them, not yourself. Diversify or get devalued.

✅ Strong Processes & Systems
Buyers love boring. The more repeatable and documented your operations are, the higher your valuation climbs.

❌ Drama & Dependency
Family feuds, shaky books, one-key-employee-away-from-disaster setups? All red flags.

So yeah, profitability matters, but stability is what really drives value. A consistent, boring business is a valuable business.

Asset Sale vs. Stock Sale: Don’t Get Screwed

If you’re ever selling, pay attention here.

• Asset Sale: You’re selling the “stuff” of the business—equipment, contracts, goodwill, the brand—but not the legal entity. Common for small businesses.
  
  
• Stock (or Unit) Sale: You’re selling ownership in the entity itself, warts and all—liabilities, debts, and tax skeletons included.
  
  

Buyers love asset sales. Sellers usually don’t. Talk to someone who knows the difference before signing anything with too many commas in it.

Why “Future You” Will Thank You

A valuation today isn’t about selling tomorrow. It’s about building a more valuable company while you still can.

The more you understand what drives your worth, the easier it is to pull the right levers—recurring revenue, stronger margins, reduced owner dependence, cleaner financials.

Translation: less stress now, and a much fatter payday later.

So, stop guessing. Get a valuation, get real data, and get strategic.

Shield Advisory Group can help you hold up that mirror…because the truth may hurt, but it’s also the first step toward being worth more.

💸 Think You Know What Your Business Is Worth?

Let’s find out. It’s just 3 quick questions. Get them right, and you could score 50% off a professional business valuation (worth $7,500).

👉 Take the “Show Me the Money” Challenge 

Because bragging about your business is fun… but knowing what it’s actually worth? That’s power.