Murphy Musings

What is Your Business Worth?

By Mark Pothier 2024-04-12

The typical business owner has most of their net worth tied to the value of their business. While they work their business daily, they often are unsure what their business would be worth if they went to sell.  

We at Murphy Business Atlantic believe business owners should have a realistic idea of what their business is worth today. Even if business owners are not ready to sell right now, knowing this number will set them up for success in the future. Here are four reasons why:

1.    Daily Decisions: When you know where you currently stand, you can make decisions about where you want to go. A valuation can not only tell you the value of the business today, but it can also identify areas of concern while you have more time to correct them.

2.  Growth: Knowing your value can help you decide how best to grow your company: should you open a second location, add more salespeople, go deeper with current clients? A proper valuation will also guide you in decisions on future capital investments.

3.  Financial Planning: Having your financial planner estimate the value of your business can lead to a wildly inaccurate picture. We have seen too many business owners who are ready to retire, only to realize that the proceeds they were counting on from the sale of their business are less than expected.

4.  Approached by a Buyer: If someone says they want to buy your business, knowing what the company is worth will keep you on sound footing for the conversation.

Whether you are thinking about selling, doing estate planning, or planning your future, it’s a good idea to know the true market value of your business. At Murphy Business Atlantic we offer a relatively inexpensive market-based opinion of value, as a way to make sure you are making wise business and personal decisions. Contact us to start the confidential process.