A lot of owners put off getting a valuation because they think the business has to be in perfect order first. It does not. But the difference between a useful first conversation and a vague one is almost always what the owner brings to the table. Walk in with the right handful of documents and you leave with a range you can plan around. Walk in with a gut feel and you leave with another gut feel. Most of what follows can be pulled together in an afternoon or two.
1. Three years of tax returns and financial statements
Start with the business tax returns for the last three full years, a profit and loss statement and balance sheet for each of those years, and a year-to-date profit and loss. The returns matter more than owners expect. Buyers and their lenders anchor on what was filed, so if your internal statements and your returns tell different stories, note why before anyone asks. Do not clean anything up first. Bring the numbers as they are. A valuation built on the real books is worth far more than one built on the books you wish you had.
2. A written list of your add-backs, with the backup
Most smaller businesses are valued on seller's discretionary earnings: net profit plus the owner's salary and benefits, plus expenses that are personal, one-time, or non-cash. Write yours down rather than carrying them in your head. Your own pay and payroll taxes, your health insurance, a vehicle the business covers, a one-time legal bill, depreciation, interest. For each one, note where it shows up in the books and how you would prove it to a stranger. An add-back you can document is worth something. An add-back you have to explain from memory gets discounted, and often dropped.
3. A one-page picture of where the revenue comes from
No customer names are needed at this stage. What helps is the shape: what share of revenue your top five and top ten customers represent, how long they have been with you, and whether any of them are under contract. Add a simple split of revenue by product line or service, and how much of it repeats year after year versus one-time work. Concentration is one of the first things any buyer asks about, and a business where no single customer is more than 10 to 15 percent of sales is a very different conversation from one where a single account carries a third of the revenue.
4. The documents that decide what actually transfers
These do not change your earnings, but they change what a buyer can buy and what a lender will finance. Bring your lease, and know the remaining term, the renewal options, and whether it can be assigned. Bring an equipment list that separates what you own from what you lease, with rough ages. Note any loans or liens against the business, any key customer or supplier agreements, and the licenses or permits the business needs to operate. Gaps here are not deal-breakers a year or two out. They are exactly the kind of thing that turns into one if nobody looks until diligence.
5. Who runs what, including you, and what you want
Sketch an honest org chart: who does what, how long they have been there, and who could run the place for two weeks if you were unreachable. Then write down your own week. The hours, the decisions only you make, the customers who only call you. Having run businesses myself before brokering, I know this is the page owners least want to write, and it is often the one that explains the gap between what they hoped the business was worth and where the range lands. Finish with your own goals: a rough timeline, the number you need from a sale to do what comes next, and whether you would stay on for a transition.
The takeaway
A valuation is only as good as what goes into it. Bring the real numbers, the backup for your add-backs, an honest picture of your customers and your own role, and you get a number you can plan around instead of one that flatters you. Whatever you could not find while gathering this list is not a problem. It is your to-do list.
