Valuations for Growing a Business
Annual Business Valuations
You may be asking, why do I need to understand the value of my business while I am in the process of growing it?
Think of a valuation as a check-up with your doctor. As with your health, you should be considering the state of your business year-after-year. Why? As a business owner, you should be obsessed with tracking performance and understanding if the direction you are heading is adding value to your business or detracting from it.
A business valuation can help you understand where your business stands today and the potential for growth. A valuation gives insight into the strengths and weaknesses of your company, value drivers, and how a potential buyer will view your business.
Through a business appraisal, you can develop strategies to grow your business.
Every business owner should obtain a yearly business valuation that can be referred to. A business valuation provides multiple facts and figures regarding the value of a company by observing market data, asset values, and the company’s cash flows. This enables you to measure growth and plan for the future.
As valuation professionals, we are asked daily:
“What is the value of my company today?”
A business valuation can assist you in understanding the value of your business and the potential value drivers to focus on to help build value in your business. This can help you maximize the value by the time you are ready to exit or sell your business.
Initial Considerations
We all understand that if a company decreases its expenses and/or increases revenue, the value of the company increases. When it comes to business valuations, the value of a company is not that simple. Our valuation specialists look at the history of the financials and factors like revenue growth in order to select guideline transaction multiples. Understanding how someone like a valuation specialist views the value will help you see what truly matters. The need to build value and then instituting changes to grow that value is different. We provide you with the value of the business and then point out ways in which to grow your business.
Below are a couple of items that you can implement now in order to increase the value of your business:
Increase profitability
- Identify expenses that are currently incurred that could be easily eliminated or switched out
- Grow intangible assets
- This could be through your CRM system or proprietary technology, etc.
- Increase employee retention
- Ultimately, the cost of training and replacing can far outweigh paying your employee a higher salary
- Diversify revenue through new revenue streams
- This may be more difficult to do, but by understanding the needs of your customers, you can identify new products and services to offer
- Create your Dream 100 list
- Identify future prospects in the market and work to ensure that you land them as clients
Simplify
- Systems, systems, systems
- Establish simple, but detailed systems for the following:
- Human Resources: how do you search, find, hire, orient, manage, review, promote, retain, and fire people
- Marketing: how is your message communicated to your target audience leading them to buy your product
- Sales: how do you convert a lead into a customer
- Operations: how do you provide your service or make your product for your customer
- Accounting: what is your current method for tracking the money
- Customer-retention: how do you take care of your customers
- Establish simple, but detailed systems for the following:
Organize
- If you are working with paper, this needs to stop. All the documents should be neatly cataloged through a secured cloud storage
A business valuation expert through the valuation process will point out where you could improve. Ultimately, the primary area that we have seen increase value is in the systems of the company. The more documented these systems are, the more tuned in the hired workforce can execute efficiently. The ability for a potential buyer to inherit these systems is key. While you create these systems, you will personally notice inefficiencies in your company that you can tweek today.
If you would like direction, Peak Business Valuation, offers a complimentary consultation, enabling you to discuss with us your business and how a business valuation might help you grow the business.
Kelli and Ryan Hutchins, co-founders of Peak Business Valuation want to help you grow your business and maximize the value of your company.
Frequently Asked Questions
Why should I get a business valuation if I'm not planning to sell?
A business valuation is more than an estimate of value—it’s a health check for your company. It helps you understand what’s driving your company’s value, what may be limiting it, and where opportunities exist to improve. By tracking value over time, you can measure progress, make more informed decisions, and build a stronger, more valuable business long before you’re ready to sell.
How can a business valuation help me grow my business?
A business valuation identifies the strengths and weaknesses that influence your company’s value. It highlights key value drivers, risks, and opportunities for improvement, giving you a roadmap to increase business value by improving profitability, reducing risk, and strengthening the qualities buyers, lenders, and investors value most.
What factors increase business value?
The two primary drivers of business value are cash flow and risk. Buyers, lenders, and investors also consider factors such as recurring revenue, customer concentration, owner dependence, management depth, financial reporting, growth trends, and industry conditions.
Can a business valuation identify opportunities to increase business value?
Yes. A business valuation identifies the factors that support or limit your company’s value, giving you a roadmap for improvement. Common opportunities include increasing profitability, growing recurring revenue, diversifying customers, strengthening financial reporting, reducing owner dependence, and improving operational efficiency.
What are the most common factors that limit business value?
Common factors include inconsistent cash flow, customer concentration, owner dependence, weak financial reporting, limited management depth, and undocumented business processes. Addressing these issues can reduce risk and increase business value over time.
Can a business valuation help with strategic planning?
Yes. A business valuation provides objective insights into your company’s financial performance, market position, and value drivers. Many business owners use business valuations to guide growth initiatives, capital investments, succession planning, and long-term decision-making.
Can a valuation help me secure financing to grow my business?
Yes. Business valuations are often used to support financing, particularly SBA loans. Understanding your company’s value and the factors driving it can strengthen your loan application and help determine whether the financing requested is supported by the business’s value.
How often should I update my business valuation?
Many business owners update their business valuation annually. Regular valuations help measure progress, benchmark performance, identify changing risks, and track how strategic improvements affect business value over time.
How long does a business valuation take?
Peak Business Valuation typically completes most business valuations within 5–14 business days after receiving the necessary financial information, providing timely insights without delaying important business decisions.
When is the best time to get a business valuation?
The best time is before you need one. Whether you’re planning to grow, seek financing, bring on investors, or eventually sell your business, understanding its value today gives you time to improve key value drivers and make more informed decisions.
