The Value Gap Check
You have a rough figure in your head for what the business is worth. There is usually nothing behind it.
Put in your revenue, your owner-adjusted profit and three honest answers about how much of it runs through you. You get a range, set against the number you need.
This is Step 3 of The Readiness Curve™: what the business is worth today, set against the number you actually need. The distance between the two is the work. What you get here is an indicative range, not a valuation.
Last full financial year. Rough is fine.
Profit before interest and tax, after paying a market salary for the job you actually do.
Your Freedom Point. The amount you need to fund the life you want after this business.
Three questions, word for word from The Readiness Scorecard. Your answers decide how wide the range is.
If you stepped away for 90 days with no contact, what happens?
1The business stops. It relies entirely on my presence.
5The business would run and grow for 90 days without me.
Your most important customers. Who is the relationship actually with?
1Every significant relationship is with me personally.
5Customers buy from the business. My team holds the relationships.
What share of revenue comes from your largest customer?
1One customer represents more than 30 percent.
5No single customer represents more than 10 percent.
One question at a time. Nothing is sent anywhere until you ask for it.
Indicative, not a valuation. A range, on the assumptions below, which you can change.
The range is worked out.
One email unlocks the range and the gap here on this page. A copy goes to your inbox with the assumptions attached.
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A band on a scale. Never one figure.
A single number would be the wrong answer told confidently. Too much moves: tax, debt, structure, who is buying and what they are buying it for. What this page can show you is a range, the number you said you need and the distance between the two.
- The multiple1.5x to 3.0x owner-adjusted profit. You can change both numbers in the table below.
- The low endYour worst answer of the three dependence questions sets it.
- The high endYour best answer of the three sets it. The two are never averaged.
- What is left outTax, debt and structure. All three move the answer and all three sit outside this page.
- The numbersYours, typed in above. Nobody has looked at your accounts.
- The scopeAustralian dollars, excluding GST. Built for revenue between $1.3M and $30M.
Indicative, not a valuation
Every assumption is on this page.
Change either multiple and the range above moves while you watch.
| Assumption | Value | What it does |
|---|---|---|
| Low multiple | Bottom of the range, with your worst of the three answers. | |
| High multiple | Top of the range, with your best. | |
| Your three answers | 0.60x · 0.75x · 0.85x · 0.95x · 1.00x | Each answer keeps a share of the value. An answer of 1 keeps 60% of it and an answer of 5 keeps all of it. Your worst answer sets the low end of the range and your best sets the high end. They are never averaged. |
| Not included | Tax, debt, structure | All three move the answer. All three sit outside this page. |
| Scope | AUD, excluding GST | Built for revenue between $1.3M and $30M. |
| Status | Indicative, not a valuation | Arithmetic on four numbers you typed in. A range, never one figure. |
The multiple is the assumption that moves the answer most, so it is the one you can change. 1.5x to 3.0x on owner-adjusted profit is the working band this page starts from. Type your own over it and the range above redraws while you watch.
What the band cannot know is your tax position, your debt, your structure or who the buyer turns out to be. That is why it is a range and why it says indicative rather than valuation. Reading a real number off real accounts is a different job and it starts with a conversation.
Every adviser around you is paid on the year before or the year after, so the ending itself is nobody’s deliverable. It stays yours.
Kerry Boulton, The Exit Strategy Group
Kerry Boulton is an Accredited Family Business Advisor, Certified Value Builder Advisor and Certified Exit Planning Advisor.
The money is one pillar of three.
This page looked at the numbers. It has not looked at whether the business runs without you, or whether there is a date.
The Readiness Scorecard
Three pillar scores, a Will score and the one pillar worth working on this quarter.
The Sellable Business Advantage
The monthly session that moves an owner from problem aware to solution aware. What actually gets discounted when the ending arrives, why it is almost never the revenue and the three scales your own ending has to be designed on.
Want this number read off your accounts? Apply for The Blueprint.