Valuing a Business

Founders often come to me wondering how to value their business.

Some are familiar with the traditional methods

(aka. Multiply your annual profit by an industry-standard multiple)

But that also doesn't always cut it.

Because what if

• You aren't making a profit yet?

• Your business is really small or early?

• There IS no industry standard for your business?

• A hypothetical buyer wants you for something other than your profits?

In truth, valuing businesses is complicated.

(Which is why folks hire CFOs and accountants to do it)

But, as a baseline, here's simple way to think about it:

The value of a business you're selling is equal to

The hypothetical value a potential buyer could earn from owning it

Without changing much about it

Other than cutting YOU - the founder - out of it.

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