When it comes to business ownership, perhaps no question looms larger than: “What is my business actually worth?” On the latest episode of The Ownership Advantage, host Tanner sits down with Kyle McCulloch, Wall Street-trained, Main Street-minded, and VP of North America at Bizval, to unpack the often-misunderstood world of business valuation.
The number itself, Kyle notes, is where most entrepreneurs get it wrong. “A lot of people just frankly have no idea what their businesses are valued at,” Kyle shares. Too many owners base value on gut feelings, hearsay at networking events, or even straight revenue multiples, without digging into the underlying fundamentals that actually count.
The Multiples Myth: Sense-Checking Your Company’s Value
Traditionally, business owners have gravitated toward simple formulas like “x times revenue” or “x times profit.” But Kyle emphasizes these multiples are only one piece of the valuation puzzle—and primarily useful as a “sense check” to gauge current market temperature.
True valuation, he explains, starts with current market trends and then adjusts for the unique risk factors tied to your business. This involves looking at owner dependency, customer concentration, level of debt, and even the age of your business. “A multiple is as good as the period that the business is doing business in... you’re assuming that the market conditions are remaining exactly the same for the multiple to hold true,” he explains. In short: Don’t bank your retirement on a back-of-the-napkin multiple.
Owner Dependency & Documented Systems: Your Secret Value Drivers
One of the biggest blind spots for small business owners is owner dependency—that is, having too much of the business’s knowledge, relationships, and operational control tied up in a single individual. This can be a fatal flaw when it comes time to sell. “If you have an owner who’s got everything in his head... your valuation is zero if something happens to them,” says Kyle.
The antidote? Documenting systems, training staff, and pushing key processes out of your own mental filing cabinet and into tangible workflows. Buyers and investors look for companies that can run independent of the founder, and documented processes both drive value and enable smoother exits.
De-Risking Through Diversification
Another undervalued component in building a higher valuation is client concentration—relying on one or two customers for the lion’s share of your revenue. “If that client leaves, what happens to your business?” Kyle warns. Smart owners reinvest part of big customer windfalls into sales and marketing, building a broader revenue base and shielding their business from sudden shocks.
Remember, valuation comes down to two big levers: cash flow and risk. Minimizing risk by spreading out your customer base—and ensuring cash flow remains strong and stable—sets the stage for a premium valuation.
Timing Is Everything: When to Start Preparing for an Exit
Maybe the biggest myth of all is that exit planning can wait until you’re ready to sell. “Best case scenario, you start thinking about it from day one,” says Kyle. Realistically, most businesses should allow at least three to five years to prepare. Like rehabbing a house infested with termites, cleaning up financials and shoring up operational weaknesses takes time—and buyers often move on if the “repairs” come too late.
Annual or semi-annual valuations, now powered by tools like Bizval, make tracking progress and identifying value drivers easier and more affordable than ever. Owners should treat business valuation like a health check or home appraisal—a number to monitor, not just when you’re in crisis, but as a guide to grow toward your goals.
Leaning Into the Boring: The Not-So-Secret Sauce
Kyle leaves us with an essential piece of advice: “Lean into the boring stuff... That’s where the biggest gains are made.” It’s documenting SOPs, cleaning up books, diversifying revenue, and building team independence that supercharge your company’s worth. In a world of shiny objects and quick fixes, the entrepreneurs who quietly “do the work” are the ones who reap the biggest rewards at exit.
If your business is your biggest retirement asset, don’t leave its value to chance. Start thinking—and acting—like a future buyer today. Check in on your valuation, de-risk your operations, and invest in the systems that build a business with enduring, transferable value.
Check out the full episode on YouTube HERE
Listen to the full episode on Apple Podcasts HERE