Business owners often hem and haw about ordering a valuation. Here’s the hard truth: If you don’t know how much your business is truly worth, your company’s success, your ability to sell, and even your retirement could suffer. It’s not that business owners don’t know the value of appraising their company, it’s that they’re often overconfident in their ability to do it themselves.

However, businesses – and valuations – are far more complex than most owners realize. From growth strategies to personnel structure, every business is unique. It takes an experienced and accredited appraiser to analyze these nitty-gritty details.
Moreover, leaving a valuation up to chance can come back to bite you in the end. Here are three reasons why you should view an accredited valuation as a necessity, not an option:

1. A buyer will conduct one anyway – Potential buyers almost always conduct a valuation of their own. Why would they invest in a company when its value is a big fat question mark? However, a valuation isn’t an exact science, and buyers want to snatch up businesses for the lowest possible cost. We’re not saying it’s going to happen, but it’s possible that subjectivity could lead to a lower valuation than you’d expect. Ordering a valuation from an accredited, independent appraiser gives you an unbiased number you can trust, and a leg to stand on if your buyer’s valuation seems low.

2. Your retirement planning can suffer – Business owners fear retirement for many reasons. Probably the biggest revolves around the uncertainty of having enough money to retire the way they’ve dreamed. Creating a retirement plan starts with knowing how much your company is worth, and consequently, how big your pot of gold will be down the line.

3. Your business might not be as sound as you think – Valuations are primarily calculated based on cash flow and risk. Cash flow might seem simple, but risk can be tricky. Some business owners, for example, believe their company is in tiptop shape. Their cash flow is high, their operations are running efficiently, and everything seems great. Then a valuation reveals that half of their revenue comes from one or two customers. Lose one of those customers, and cash flow plummets. That’s a precarious position to be in, and one that can severely impact your company’s worth.

Without a business valuation, you’re leaving your future and business to chance. Solicit an accredited appraisal, so you can feel secure in knowing your company’s true value.


Rock LaManna helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He is President and CEO of the LaManna Alliance, and provides guidance on how to grow a printing business, merge with a synergistic partner, make a strategic acquisition, or create a succession plan. Rock can be reached by email at [email protected].