5 Business Valuation Questions Every Owner Should Ask

Forbes

4 days ago

If you're banking your future on selling your business, it's time for a reality check.
Think your business is worth millions? Think again. A recent survey revealed that 96% of small business owners don't know what their business is actually worth. And most? They overestimate their business valuation, sometimes by six figures or more.
If you're banking your future on selling your business, it's time for a reality check.
In this article, we're cutting through the mistakes, misunderstandings and confusion around small business valuations. I'm answering the five most common questions business owners ask about how valuation. Whether you're looking to sell this year or in three years or never, as a business owner this article will give you the clarity to make smarter, more strategic decisions starting today.
Question 1. 'Why Can't I Just Estimate My Business's Value Based on Revenue or Gut Feel?'
Let's start with the classic: 'My friend sold their agency for 4X revenue. I've worked hard. I know what mine's worth.'
I hear this every week. But here's the truth: your effort, your gut feeling, your desired retirement number,… none of those define market value.
It's not personal. It's just business.
Common (but unreliable) ways business owners guess their business value:
The problem? None of these reflect what a buyer is actually willing to pay.
Every business is different. What sells for 4x profit in one industry might barely scrape 2x in another. Factors like customer churn, owner involvement, recurring revenue, and market risk all matter, often more than revenue or profit itself. If your business can't run without you, it's not as valuable as you think.
Action Step: Separate your business's emotional value from its market value. Then use a valuation method grounded in actual data, not guesswork.
Question 2. 'How Accurate Is a Valuation Tool I Found Online?'
Let's be honest: Free often sounds too good to be true. So how reliable is an online valuation tool, really?
Most owners assume a free valuation is just a gimmick. But not all tools are created equal. For example, the valuation tool I always recommend business owners isn't based on guesswork. It pulls from over 4,500 real-world business exits, totaling more than $30 billion in deals across six continents. It runs your numbers against patterns from actual sales, looking at revenue, profit margins, industry trends, and more.
Does that mean it's a full-blown appraisal? No. But is it a powerful, independent starting point for small business owners? Absolutely.
Action Step: When you use a valuation tool, be honest about your business's profit, industry, customer base, and growth rate. It's not about impressing anyone. It's about getting a real picture of where you stand and what you can improve.
Question 3. 'Why Is My Valuation Lower Than I Expected?'
This one stings. You plug in the numbers, hit 'calculate,' and the result feels like a punch in the gut. If that's you, you're not alone. Most business owners get hit with the same surprise. That's because we tend to overvalue effort and underestimate risk.
Here's what might be decreasing your business value:
The difference between what you hope your business is worth, versus what it is actually worth, is what we call "the value gap'. It's the space between what you think your business is worth and what the market will actually pay.
And it brings us to a powerful insight:
There's a difference between a valuable business and a sellable one.
You might have built something amazing. But if it can't run without you, or if growth has plateaued, buyers see risk and will price accordingly.
Action Step: Take an exit-readiness assessment to identify the biggest factors holding your valuation back. Then use that insight to build a roadmap towards your big exit.
Question 4. 'Can I Trust Business Brokers to Value My Business?'
Short answer: it depends. Here's the reality: Many business brokers make money only when they sell your business. That creates an incentive to inflate the valuation just to win your listing.
And while a higher number might feel good at first, it can backfire fast. Deals fall apart. Buyers walk away. Months are lost. Confidence takes a hit.
The truth is, overpricing your business doesn't increase your chances of a better sale. It often delays the deal or kills it altogether.
Action Step: Always ask brokers to explain their valuation methodology. Better yet, get an independent valuation first, so you walk into those broker conversations with knowledge.
Question 5. 'When Should I Start Thinking About Getting a Business Valuation?'
Too many owners ask this question when it's already too late. 'I'm not selling yet. Should I still bother?' Yes. And here's why.
A business valuation isn't just for those business owners looking to sell their business. It's for smart planners who want options.
Your business valuation tells you how much of your net worth is tied up in the business and how liquid it really is. It shows you what your exit might look like. It helps you spot weaknesses before buyers do. But most importantly, it lets you set clear, strategic goals to build wealth before you're burned out or backed into a corner.
Think of it like a health check-up. You don't wait for a heart attack to start eating better. You get annual blood work, make small changes, and track improvement.
Same with your business.
Action Step: Start treating your valuation like a financial KPI. Check it once a year. See how your strategic efforts are shifting the valuation. That's how real wealth is built: on purpose, not by accident.
Final Thoughts: Know Your Business Valuation, Own Your Future
Business valuation is about numbers and clarity, confidence and control.
When you know what your business is worth, and what's holding that valuation back, you shift from guesswork to leadership. You stop reacting and start engineering your big exit. You get to make choices: Grow or sell. Delegate or hire. Automate or pivot.
It starts by asking the right questions, and being brave enough to face the answers. Because knowing your business valuation? That's the first step to owning your future.