My business is worth WHAT!
- Arnold Shields
- Sep 3, 2010
- 3 min read
Updated: Jun 18
As forensic accountants, we’ve seen it all too often.
Business Owner: “I’ve decided it’s time to retire. How much is my business worth?” Advisor: “How much do you think it’s worth?” Business Owner: “Maybe around $2.5 million.” Advisor: “Actually, based on a formal valuation, it may be closer to $500,000.” Business Owner: “That can’t be right… I can’t retire on that!”
Unfortunately, this isn’t just a hypothetical conversation – it’s a reality for too many business owners in Australia. But it doesn’t have to be you.
The Retirement Trap: Waiting Too Long to Value Your Business
Most owners don’t think about valuing their business until they’re ready to exit. By that time, it’s often too late to make meaningful changes to improve its value. Years of hard work, long hours, and dedication should lead to a valuable business – but that’s not always the case if no planning has been done.
It’s a classic case of working in your business, not on it.
Many owners see their business simply as a source of income. There’s a vague plan to “sell it one day” and fund retirement with the proceeds – but no real steps are taken to make that happen.
Your Business Is Likely Your Biggest Asset, So Treat It Like One
In Australia, most small business owners nearing retirement don’t have large super balances. Their home may just be paid off. They may have modest investments – but the business? That’s the big-ticket item.
And yet, they often know far less about the value of their business than they do about their super or share portfolio.
It’s time to change that mindset.
Ask Yourself These Questions:
Do I actually know what my business is worth?
Have I had a professional valuation done in the last 2–3 years?
Do I know what factors drive the value of my business?
What steps should I take today to increase that value?
Is my business part of my retirement strategy?
Has my financial advisor considered the business in my broader asset mix?
Why Business Valuation Is Different, And More Complex
Unlike publicly listed shares, your business:
May not have an obvious buyer.
Could vary dramatically in value depending on who’s interested and why.
But here’s the upside – with the right preparation, you can improve both of those factors.
You can make your business more attractive. You can increase the likelihood of sale. You can boost the final price. But only if you start now.
Get Real About the Value, And Get Serious About the Future
Many business owners treat their company like their “baby” – and rightly so. It’s taken years of work, risk, and sacrifice. But emotion doesn’t help when it comes to financial planning or business exit strategy.
The sooner you start treating your business like an investment, the better positioned you’ll be.
You don’t have to be caught off guard.
You don’t have to be that business owner.
Next Steps: How Dolman Bateman Can Help
We help business owners like you plan for a successful, profitable exit. Whether you’re 2 years or 10 years from retirement, our business valuation and advisory services can help you:
Understand your current business value
Identify key drivers and risk areas
Develop a plan to increase your sale value
Align your business with your retirement goals
Don’t wait until it’s too late. Start now, and build a future you can retire on.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
