A Whole New Way To Value Your Company

How much is your company worth? When I type this into Google, I get pages and pages of various business valuation methods from the “adjusted net asset method” to “historical earnings valuation” and “discount cash flow valuation”. All of these are attempts to create a financial model for how much money a random buyer might pay for your company.

But how much is your company worth… to you… right now? I’m not talking about some anonymous buyer on an open market. After all, this is YOUR company. It’s what you do. It’s probably part of your identity. My Google results don’t acknowledge any of that. And why should they? They don’t know what’s important to you. They measure the easily-measurable and objective metrics of a company – things like revenue, profit, cash flow, growth, and (maybe) customer retention or brand recognition.

Holistic Valuation

But what if we try to measure the more abstract values that matter to you on a daily basis? Let’s measure things like your ability to sleep at night, your general happiness, how much you like the people you work with and the work you do, how many hours a week you need to work, how much you like your customers, how confident you are in the future of your business, and whether you’re making the world a better place.

I would argue that Company X earning $500K a year where you need to work only 20 hours a week is worth a lot more to you than the Company Y earning $500K a year where you need to work 60 hours a week. But if Company X makes you very unhappy and Company Y makes you very happy, perhaps our valuation is flipped.

This holistic approach begs us to evaluate, track, and measure these more squishy metrics. Are you happier this year than you were last year? What can you do to ensure that you’ll be even happier next year? What measures can you take to increase the pride that you and your employees will have in your work?

It also means that you can increase the holistic value of your company today – without needing to gain any new clients or raise your rates. It’s just a matter of thinking about what’s dragging you down and what’s bringing you up. How can you do more of the up things and less of the down? Is there a weekly meeting you don’t really need to attend? Is there a painful task that you can delegate? Perhaps hiring someone may lower profit but raise your overall excitement about the company. Perhaps firing someone might do the same.

Financial value is certainly a factor in holistic value. It’s a significant and important factor, but it’s just a part of the whole. However, I have yet to see a regressions analysis and forecasting spreadsheet which includes a line item for happiness or job satisfaction. Maybe there should be such a thing. But for the time being, this holistic valuation concept allows us to step back and take a wider view of “value” into account as we think about what’s important and make decisions for our companies and ourselves.

Jeff Robbins is a business coach, mentor, and virtual business partner who works one-on-one with company owners and leaders to help them build vision and direction for their companies while building productivity, stability, and happiness for their employees and themselves. You can work with him too. Reach out to set up a free session.