How much is my business worth?

Anna Stubbs • August 31, 2022

How much is my business worth?

This is a question many of our clients want an answer to! The truth is, it depends on a range of factors and any valuation is only helpful as a guide for planning forward. The ultimate value of a business is the price a willing buyer is prepared to pay for it. 


The prevailing economic climate and state of the business’ sector can affect company valuation for better or worse, as can your reasons for selling. For instance, if you need a fast sale due to ill health, the value may be lower than if a sale was taking place under more favourable circumstances.

Valuing a business is a complex process and we are available to support you throughout.



So what are the most common methods of valuing a business?


Price to earnings ratio (P/E)

The price to earnings ratio uses multiples of profit, so this may be an appropriate valuation method if you own a well-established business with a good track record of profits. ‘Price’ refers to the company’s current share price and ‘earnings’ refers to the earnings per share (EPS). The P/E ratio indicates the business’ expected growth in earnings per share in the future.


Discounted cash flow

Discounted cash flow relies on estimating future cash flows and a residual business value, and may be suited to businesses with few assets.


Entry cost

Entry cost valuation involves calculating how much it would cost to build your business to the stage that it’s reached now, including startup and recruitment costs, marketing, and the value of assets. Any savings that could have been made should then be deducted to arrive at the valuation.


Asset valuation

The asset valuation method may be suitable if your business is well established and owns high levels of tangible assets. The Net Book Value (NBV) of assets is calculated and then adjusted to account for external factors such as depreciation and inflation.


Valuation based on industry

Some businesses are valued based on the industry in which they operate. The retail industry is one example, where the number of outlets is an important element for consideration. Industry ‘rules of thumb’ use factors specific to an industry and can provide a more accurate calculation in some cases.


Other considerations when valuing your business

Intangible assets are a key factor when valuing a business. Intellectual property, goodwill, business reputation, and even a premium business location can all add considerable value in the eyes of potential purchasers.


Spotlighting these intangible assets also allows you to improve their value where appropriate. For example, registering ownership of a trademark or patent, building up their reputation even further or improving the condition of their premises.


Please talk to us about valuing your business as this can lead to a range of important considerations and actions. 

The basics of business finance: income and expenditure

By Anna Stubbs • November 15, 2025
Understanding the financial management of your small business is a vital skill as a business owner. And it starts with an awareness of two fundamental concepts: income and expenditure. Grasping the difference between what comes in, and what goes out, is crucial for your financial health, making informed business decisions and the overall survival of the company. Let's break down the basics.

Don't end up paying tax on uncollected debtors!

By Anna Stubbs • November 15, 2025
Did you know you still have to pay tax on uncollected debtors? This is because you pay tax on your sales figures irrespective of whether you have collected the cash.  To avoid paying tax on uncollected debt, here are some quick and easy-to-implement debt collection strategies to ensure your hard-earned money is sitting in your bank account (and not in theirs): Agree on your payment terms at the time of sale Get the Terms of Trade signed off in writing before you start the job Include a guarantee in the payment terms Ask for a deposit Invoice as quickly as you can Change your payment terms to 7 days or ‘on delivery’ Send statements with only two columns – current and OVERDUE Schedule overdue reminders and follow up the day after the due date Put someone other than the business owner in charge of collection – owners are usually too soft! Document what your customers have promised in terms of payment and hold them to it Use a debt collector sooner rather than later – the longer you leave it, the harder the debt will be to collect Stop credit for customers who are late on payment Take action! Reflect on how many of these ideas you've integrated into your business, and check how many you're actively applying. Don’t let procrastination hold you back — address your debtors today! “It’s the squeaky wheel that gets the oil” – Anon

Understanding if your business is profitable

By Anna Stubbs • November 15, 2025
Did your business run at a profit last month? Knowing if you’re currently profitable is a vital part of your financial management – but not everyone knows how to check this metric. A recent Xero survey from October 2025 revealed that nearly two in five small business owners (38%) are unaware whether their business was profitable last month. That’s a startling (and unnecessary) failing when today’s cloud accounting makes it so easy to judge your profitability. Let’s look at what we mean by ‘profitable’ and how to track and measure your profitability.