If you’re like most business owners I talk to, your business isn’t just what you do; it’s where most of your wealth lives. Yet, surprisingly few owners know what that number really is. Imagine pouring all your money into a 401(k) and never checking the balance. That’s exactly what’s happening here.
Knowing the value of your business isn’t just for when you’re thinking about selling. It’s about clarity. It’s about making smart, strategic decisions that help you protect and grow your personal net worth.
Why Most Business Owners Are in the Dark About Valuation
Roughly 85% of small business owners have the majority of their personal wealth tied up in their business. But only 2% have had a formal valuation done. That’s not a typo. Most are flying blind.
Take the hypothetical case of “Tim,” a business owner who has 80% of his wealth tied up in his company. He knows diversification is important, but he’s never bothered to get his business valued. What happens if Tim needs to make a strategic exit, or raise capital? Without knowing his numbers, he’s gambling with his future.
Action Step:
If you haven’t done a professional valuation in the last 12-18 months, it’s time. Markets change. Your industry changes. Your value changes. You need updated numbers to make informed decisions.
Why Knowing Your Business’s Worth Matters. Even If You’re Not Selling
Understanding the value of your business isn’t just about a potential sale. It’s also about securing financing, attracting investors, and knowing how much leverage you actually have.
Small businesses, especially those with fewer than 20 employees, make up a huge piece of the U.S. economy. Yet, many owners have no idea what their company is worth today. That’s a risky spot to be in.
Action Step:
Use tools like the Value Builder Score for a preliminary assessment of your business’s worth. Then, work with a professional to get a more in-depth valuation.
What’s at Stake: Economic Uncertainty and Your Personal Net Worth
Recent economic shifts—rising inflation, supply chain headaches, and labor shortages—have made it harder than ever to predict what’s next. But businesses that have a clear understanding of their value are better positioned to weather uncertainty and seize opportunities when they come.
A clear valuation gives you clarity on when to reinvest, when to diversify, and when it might be time to think about an exit. Without it, you’re guessing—and that’s not a strategy.
Action Step:
Monitor economic trends that impact your industry. Pair that with regular valuations, so you’re never caught off guard. Build a financial strategy that evolves with your business.
Practical Next Steps to Nail Down Your Business Valuation
If you want to gain clarity on where you stand, here’s where to start:
1. Hire a Professional Valuation Expert
A third-party expert brings objectivity and proven methodologies to the process. You’ll get an accurate number, and insights on what’s driving your current valuation.
2. Conduct Regular Financial Reviews
Make reviewing your financials a regular part of your strategy. Clean books and clear data make valuations easier and more accurate.
3. Leverage Technology for Preliminary Valuations
Tools like the Value Builder Score can highlight strengths and weaknesses in your business, giving you areas to focus on for improvement before your next formal valuation.
For most business owners, your business is your largest asset. But if you don’t know what it’s worth, you’re missing a key piece of your financial strategy. Regular valuations aren’t just for people thinking about selling; they’re a fundamental part of protecting your wealth and building financial certainty.
Ready to understand your business’s true value?
Schedule a consultation with Nth Degree CPAs today. We’ll help you uncover the real numbers, and build a strategy to protect and grow what you’ve built.
