the startups.com platform about startups.comCheck out the new Startups.com - A Comprehensive Startup University
Education
Planning
Mentors
Funding
Customers
Assistants
Clarity
Categories
Business
Sales & Marketing
Funding
Product & Design
Technology
Skills & Management
Industries
Other
Business
Career Advice
Branding
Financial Consulting
Customer Engagement
Strategy
Sectors
Getting Started
Human Resources
Business Development
Legal
Other
Sales & Marketing
Social Media Marketing
Search Engine Optimization
Public Relations
Branding
Publishing
Inbound Marketing
Email Marketing
Copywriting
Growth Strategy
Search Engine Marketing
Sales & Lead Generation
Advertising
Other
Funding
Crowdfunding
Kickstarter
Venture Capital
Finance
Bootstrapping
Nonprofit
Other
Product & Design
Identity
User Experience
Lean Startup
Product Management
Metrics & Analytics
Other
Technology
WordPress
Software Development
Mobile
Ruby
CRM
Innovation
Cloud
Other
Skills & Management
Productivity
Entrepreneurship
Public Speaking
Leadership
Coaching
Other
Industries
SaaS
E-commerce
Education
Real Estate
Restaurant & Retail
Marketplaces
Nonprofit
Other
Dashboard
Browse Search
Answers
Calls
Inbox
Sign Up Log In

Loading...

Share Answer

Menu
Exit Strategies: When looking to sell my company, how can I determine its value if it's service based and has no subscription model?
RS
RS
Rodger Stephens, Over 25 years managing and growing businesses answered:

Hi, your question is right up my alley...I'm a business growth and business valuation expert. I often position clients to exit their businesses for a variety of reasons. Please allow me to give you some simple, informative tips.

Your best approach is planning...planning applied to good operational and financial performance driven by a good growth plan over the next 3-5 years leading up to your sale.

Specifics are many and complex, but the formula is simple: 3-5 years from now, your future potential buyer will look at your revenue/cash flow growth (for the past 3 years) and your future projections (reasonable projections) to determine your value...at that time. You'll need to show them a great picture of the past and the future when you do!

So here's what you can do today to give create this great picture:
Do a valuation now. Be sure it includes a projected valuation for each of the next 3-5 years. This projected valuation will be based upon financial/operational projection(s). This means your future valuation is stated, provided you achieve these projections.

Projections are all about forecasting all/each department activities and the resulting company wide financial statements which reflect the financial performance of these projected activities.

In your valuation projections, be reasonable, but do some reaching at the same time. Don't over reach, but reach for reality here! Then use this projection as a financial/operational roadmap to set company targets and plans for the next 3-5 years. This means setting key, detailed marketing, sales, service and other targets that if reached, means you are achieving your plan and consequently, your future valuation. This may also mean setting events on a company calendar which support this plan. Include your company leaders in the planning if you are a collaborative leader. When complete, give the targets to your company leaders, set their expectations to meet these targets, then support them well to do it. Give them their place in the plan, their instructions, give them incentives for reaching targets if necessary, and then work the plan as a team so you can grow into the forecasted valuation. Feel free to have some alternative projections which allow you room to either fall short on some planned goals or exceed others. Be sure these alternative projections give you known valuations in advance. This will give you room for flexibility should conditions change (hint, they often do, and can be for the better!)

I hope this helps. I'm available if you need more...this can be a complex topic, so I encourage you to explore it carefully before doing it.

Rodger Stephens, CPA, CGMA
Prize Performance LLC
Business Performance Expert

Talk to Rodger Upvote • Share
•••
Share Report

Answer URL

Share Question

  • Share on Twitter
  • Share on LinkedIn
  • Share on Facebook
  • Share on Google+
  • Share by email
About
  • How it Works
  • Success Stories
Experts
  • Become an Expert
  • Find an Expert
Answers
  • Ask a Question
  • Recent Answers
Support
  • Help
  • Terms of Service
Follow

the startups.com platform

Startups Education
Startup Planning
Access Mentors
Secure Funding
Reach Customers
Virtual Assistants

Copyright © 2025 Startups.com. All rights reserved.