The smart business owner’s guide to annual valuations

If you own a business, you should know what it’s worth every year. Annual business valuations aren’t just for sales or tax purposes. They’re a strategic tool for tracking progress, making better decisions, and staying prepared for opportunities (or surprises).

Here’s how a proper valuation process works:

1. Define purpose & scope
   Is this valuation for succession, sale, tax, or strategic planning? Knowing the “why” shapes the “how.”
2. Engage a valuation expert
   Work with a qualified valuer, accountant, or advisor who understands your industry and business model.
3. Gather key data
   Pull together:
   • Profit & loss statements
   • Balance sheets
   • Tax returns
   • Business asset registers
   • Market and competitive positioning
4. Choose a valuation method
   The expert will determine the best fit:
   • Market approach – Benchmarks your business against similar companies
   • Income approach – Values based on cash flow or profit performance
   • Asset approach – Focuses on assets minus liabilities
5. Receive analysis & valuation report
   This includes insights into:
   • Financial trends and risks
   • Competitive market dynamics
   • Your business’s current fair market value
6. Adjust & act
   Use the findings to strengthen your succession plan, identify areas to grow value, or structure future tax and financing strategies.
7. Repeat annually
   Each year builds a trendline of value, critical for business planning, investor confidence, and eventual transition.