First-Time Tips: What Sellers Should Know Before Valuing Their Business
What’s it worth?
This seems to be most sellers first question, either to themselves or to their broker, during the initial conversation/brainstorming sessions.
But before you even get to valuation, there are a few key things every owner should know that can make a big difference in the number you hear.
Here are five quick tips that can help you prepare for a more accurate (and more favorable) valuation:
Buyers want to understand your business quickly. Organized financials (ideally 2–3 years of clean P&Ls, tax returns, and a current balance sheet) go a long way in building trust and supporting your valuation.
If you run personal expenses through the business, that’s okay, but be ready to identify and explain them. And if you are going “buck wild” with personal expenses through the business it might be time to consider dialing it back a bit to maximize a future sale.
A business that depends entirely on you is tough to sell. Buyers want something they can step into and run (or staff up) without the whole thing falling apart. The more your business can operate without you, the more valuable it becomes.
Whether it’s ongoing service contracts or steady, repeat clients, consistency is king. Predictable revenue means less risk for the buyer—and less risk often translates into a better multiple. We’ve seen multiples double from businesses in the same industry just based on one having recurring revenue.
Buyers will want to know: Why are you selling?
Retirement, burnout, a new opportunity—whatever the reason, have a clear, honest story. It sets the tone for transparency and helps buyers feel more confident. And if the reason is “because the business is set to lose its largest customer and half its revenue,” then be ready for the valuation to reflect reality.
Selling a business doesn’t happen overnight. The process often takes 6 to 12 months from start to finish. Starting early gives you time to prepare, fix small issues, and go to market from a position of strength. If possible, talk to a business broker a couple years before you want to sell, not a couple months.
Final Thought:
You don’t need to have everything figured out to start a conversation. But knowing these basics can help you feel more prepared and confident as you explore your options.
If you're curious about what your business might be worth, or just want to talk through the process, feel free to reach out.
Patrick Marsch
Owner –
Nashville Business Brokers
Pinson Group Business Advisors
patrick@nashbb.com
