What Is Your Business Really Worth?

What Is Your Business Really Worth?

5 Common Myths That Could Cost You Big When You Sell

If you’re a small business owner, chances are you have a number in your head.
A dollar amount that you think your business is worth.

Maybe it’s based on your annual revenue.
Maybe it’s what your friend’s business sold for.
Maybe it’s just what you feel it’s worth after all the blood, sweat, and years you’ve poured into it.

Here’s the hard truth:

Most business owners drastically overestimate the value of their business — until it’s too late.

That’s not pessimism. That’s experience.

After three decades of working with entrepreneurs on business exits, I’ve seen the same 5 myths show up again and again. And if you’re not careful, they can wreck your plans for a successful and profitable exit.

Let’s break them down — and more importantly, let’s talk about what to do instead.

Myth #1: “My Business Is Worth 3x Revenue”

This is probably the most common misconception out there. A business generating $1 million in revenue isn’t automatically worth $3 million.

That’s because buyers care about profitability, not just sales. What matters is how much cash the business actually keeps — usually measured by Seller’s Discretionary Earnings (SDE) or EBITDA.

And those "multiples"? They don’t come from thin air. They’re based on your industry, business model, systems, team, and — most importantly — your risk profile. A business with consistent profits, a diverse customer base, and minimal owner involvement might get 4x. A less stable business might get 1.5x.

The Fix: Focus on increasing profit, systematizing operations, and reducing reliance on you. The more predictable your profits and processes, the higher the multiple you’ll earn.

Myth #2: “My Industry Dictates My Value”

It’s true that industries tend to have valuation ranges — but that’s just the starting point.

Two businesses in the same industry can command very different prices depending on things like:

  • Recurring vs. one-time revenue

  • Client diversity

  • Owner involvement

  • Scalability

Think of it like real estate: two homes in the same neighborhood can be valued very differently depending on upgrades, layout, and condition.

The Fix: Make your business stand out. Install recurring revenue streams, hire and train a reliable team, and document everything. Buyers want turnkey — not troubleshooting.

Myth #3: “I’ll Just Sell to My Employees or Kids”

It’s a great dream — pass the business to the people who helped build it or to the next generation. But in real life, it’s rarely that simple.

Do they want the business?
Can they afford to buy it?
Do they have the skills and temperament to lead?

These questions don’t answer themselves.

The Fix: If an internal succession is the goal, start planning years in advance. Train your successor, structure a buyout plan, and bring in advisors to ensure it goes smoothly. And always — always — have a Plan B.

Myth #4: “Buyers Will Pay for Potential”

It’s easy to look at your business and think, “If someone just marketed this better, or opened a second location, or added this new service…”

But buyers don’t pay for potential. They pay for performance.

Hopes and dreams don’t move the needle in a valuation. Buyers are buying what is, not what could be — unless you’ve already laid the groundwork and proven it.

The Fix: Implement the growth plans now. Don’t wait until after you’ve listed your business. Every improvement you can document (revenue lift, margin increase, customer retention) will increase your value.

Myth #5: “I’ll Sell When I’m Ready”

This might be the most dangerous myth of all. Life doesn’t always wait until you’re ready.

Burnout, health issues, market changes, family emergencies — they can all force a sale when you least expect it.

And when you sell under pressure, you rarely get full value.

The Fix: Build a business that’s exit-ready long before you plan to leave. That means clear financials, strong systems, a capable team, and a business that runs without you.

You may not want to sell yet — but if you had to, could you?

🧠 The Bottom Line: Value is Built, Not Assumed

Your business is likely your largest asset. But it’s not guaranteed to turn into retirement income unless you intentionally build it for value.

The good news? There’s a blueprint for doing just that.

If you're ready to take the guesswork out of your exit, grab a copy of my book:

👉 The Business Owner’s Retirement Blueprint

Inside, you’ll find a step-by-step guide to:

  • Preparing your business for sale

  • Maximizing its value

  • And making sure you’re personally ready for what’s next

Because you only get one shot at this.

And you’ve worked too hard to leave it to chance.