Beyond Bad Valuation: Strategies for a Winning Business Exit Part 1

So, the valuation didn’t turn out as you’d hoped? You’re not alone! Don’t throw in the towel just yet.

Let’s face it—getting a bad valuation can feel like a gut punch. You poured your heart, soul, and probably more sleepless nights than you care to admit into building your business. And now, the number staring back at you on that valuation report feels like an insult. But here’s the thing: You’re not alone. Many successful entrepreneurs have been exactly where you are right now, staring down a number that doesn’t reflect the blood, sweat, and sheer determination that built their company.

But before you start drafting that “it’s been a great ride” email, take a deep breath. This isn’t the end of your story—it’s just the beginning of a new chapter.

Even with less-than-stellar revenues or EBITDA, there are strategic ways to turn a disappointing valuation into a success story.

Yes, you read that right. A valuation is just one snapshot of your business’s worth. It doesn’t capture your potential, your passion, or the unique value you’ve cultivated.?

In this two-part series, I will show you how to shift the narrative, find the right buyers who see your business for what it truly is, and leverage the assets that might not show up in a spreadsheet but are worth their weight in gold.?

You’ve come this far—don’t let a bad valuation be the final word. There’s still hope, and plenty of it. With the right approach, you can turn that valuation disappointment into a success story. Ready to find out how? Let’s dive in.

Understanding the Bad Valuation

Let’s start with the basics. What exactly is a bad valuation??

In simple terms, a valuation is the dollar amount someone thinks your business is worth. It’s like an appraisal on your house—except instead of looking at the number of bedrooms and whether the roof leaks, they’re looking at your revenue, profit margins, cash flow and a bunch of other financial mumbo jumbo.?

But here’s the kicker: valuations aren’t set in stone. They’re more like educated guesses, and sometimes, they miss the mark.

So, what goes into that “educated guess” anyway? Well, typically, valuations are based on a mix of your revenue (how much money you’re bringing in), your EBITDA (earnings before interest, taxes, depreciation, and amortization—fancy speak for profit), and a sprinkling of other factors like market conditions and industry trends. The idea is to figure out how much a buyer would be willing to pay for your business today, based on what it’s doing right now.

But—and this is a big but—if your revenue or EBITDA isn’t where you want it to be, or if the market’s in a funk, you might end up with a valuation that feels like a slap in the face. And if you’re reading this, you probably know that feeling all too well.

The Impact of Low Revenues or EBITDA

Now, let’s talk about why those low revenues or weak EBITDA numbers seem to have such a big impact.

In the world of valuations, revenue is king, and EBITDA is queen. They’re like the dynamic duo that everyone looks at first. Revenue shows that your business can attract customers and make sales—basically, that people want what you’re offering. EBITDA, on the other hand, is a measure of your profitability. It tells buyers whether your business is just treading water or if it’s a money-making machine.

When these numbers aren’t as strong as they could be, it can send up red flags for potential buyers. They might start to wonder, “If the business isn’t making much money now, why should I believe it will in the future?” It’s not that your business isn’t valuable—it’s that buyers are cautious, and these numbers are the easiest to scrutinize.

But here’s the thing: low revenues or EBITDA don’t tell the whole story. In fact, they can hide a lot of the value that doesn’t show up on a balance sheet. Maybe you’ve invested heavily in building a killer product that’s just about to take off. Or perhaps you’ve developed a brand with a loyal following that’s primed for growth. These are the kinds of things that don’t always get reflected in a traditional valuation—but they’re the very things that can make your business incredibly valuable in the right hands.

Strategies for a Winning Business Exit

While it might feel like the numbers are against you, remember this: a low valuation is just one perspective. It’s not the end of the road, and it certainly doesn’t define the worth of your business. There’s still a lot to work with; let me show you how to take what you’ve got and turn it into a winning strategy for selling your business.

1. Reframe the Narrative

When the numbers aren’t in your favor, it’s time to flip the script. Instead of focusing on what’s lacking, let’s spotlight what makes your business a hidden gem. This isn’t about ignoring reality—it’s about shining a light on the parts of your business that have real potential and value, even if they’re not fully reflected in your current financials. Here’s how:

Emphasize potential over current performance.

Here’s an insider tip: buyers aren’t just buying what your business is today—they’re buying what it could be tomorrow. If your current revenues and EBITDA aren’t sparkling, don’t stress. What really matters is the growth potential that’s bubbling just beneath the surface.

Focus on growth potential and scalability.

Think about the bigger picture. Are you sitting on a product that’s about to break into a new market? Do you have a service that’s poised to scale rapidly with the right resources? Maybe you’ve got a loyal customer base just waiting for your next big offering. These are the kinds of things buyers want to hear. They’re not just investing in what you’ve done—they’re investing in what you’re going to do.

Highlight untapped markets or future revenue streams.

Is there a market you haven’t fully tapped into yet? Maybe your product has potential overseas, or there’s a whole new customer segment you haven’t even approached. This is gold. Show buyers where the growth opportunities lie and how they can be leveraged. Paint a picture of the future where your business is thriving in new markets, with revenues that dwarf today’s numbers. Buyers love a good story of “what could be”—especially when it’s backed up by a solid plan.

2. Tell Your Brand Story

Numbers are important, but they don’t tell the whole story. What makes your business special isn’t just the figures on a spreadsheet—it’s the story behind it. And that story can be your most powerful asset when it comes to selling.

Use storytelling to create emotional connections with potential buyers.

People don’t just buy businesses; they buy into stories. What’s the journey of your business? Why did you start it? What challenges have you overcome? How has your business made a difference? Share the passion, the struggles, and the triumphs that have shaped your brand. This is what will resonate with buyers on an emotional level—far beyond the dollars and cents.

Showcase the problem your business solves and the impact it has had.

Every successful business solves a problem. What problem does your business tackle, and how does it make life better for your customers? Whether you’re simplifying a complicated process, offering a unique service, or bringing joy to people’s lives, this is the heart of your brand story. Show potential buyers the impact your business has had—real stories, real results. This is where the magic happens, where a buyer sees not just a business, but a mission they want to be a part of.

3. Highlight Unique Assets

Let’s talk assets. And no, we’re not just talking about what’s in your bank account. Your business is likely packed with unique assets that aren’t always captured in traditional valuations. It’s time to shine a spotlight on them.

Intellectual property, customer base, brand reputation, or proprietary technology.

Do you own a patent or trademark? Have you built a brand that people trust and love? Is there a piece of technology that only your business has? These are the kinds of assets that can add serious value to your business—sometimes even more than revenues or profits. Intellectual property (IP) can be especially valuable because it’s something no one else can easily replicate. A loyal customer base or a strong brand reputation is like gold dust in the eyes of a buyer. And if you’ve got proprietary technology, that’s the kind of thing that can make a buyer’s eyes light up.

How to package and present these assets to potential buyers.

Now that you’ve identified your unique assets, the next step is to package them up in a way that makes them irresistible to buyers. Create a narrative around each asset. Explain why it’s valuable, how it gives your business a competitive edge, and why it’s going to be crucial for future growth. For example, if you’ve got a patented technology, show how it can open up new revenue streams. If you have a loyal customer base, emphasize the low churn rates and the potential for upselling. Make it clear that these assets are the keys to unlocking the next phase of growth for your business.

What’s Next?

By reframing the narrative and highlighting what really makes your business tick, you’re not just selling a company—you’re selling a vision. A vision of growth, impact, and untapped potential. And that, my friend, is something worth getting excited about.

We will continue the discussion on strategic positioning and optimizing your business in the upcoming article. For now, I want to emphasize that selling your business isn’t just about finding a buyer and signing on the dotted line—it’s about making sure you score the best possible outcome. This is where Craft provides the game-changing boost. Whether you’re just daydreaming about selling or already deep in the negotiation trenches, there’s always room to tweak, enhance, and supercharge your approach.

Think your sales strategy needs a tune-up? Or maybe your marketing could use a splash of pizzazz to attract those dream offers? You don’t have to do this alone. With Craft by your side, you’ll have the expertise to turn a good deal into a great one.

Reach out today, and let’s make your business’s next chapter its best yet!