When most people hear the word “valuation,” they instantly think of selling a business.
Fair enough - valuation is a critical step when you are looking to exit.
But here’s the problem: waiting until you’re about to sell is like checking your health only when you’re wheeled into the emergency room. By then, you don’t have time to make real improvements.
The smarter way is to treat valuation as an ongoing tool.
Not once in a lifetime. Not only when an investor demands it.
Think of it as a dashboard that tells you how your business is doing, whether you are on the right track, and what changes can push up your value.
Time to dive a bit deep.
Profit vs Value
A lot of founders are obsessed with profit. They’ll proudly say, “My company made 2 crores last year.”
That’s great, but profit is only one part of the story.
Two businesses with the same profit can have completely different valuations.
Why? Because valuation looks at more than just this year’s numbers.
It asks:
Is the profit sustainable?
Are revenues growing?
Do you depend on one big client or do you have a diversified base?
How strong is your management team?
What are your systems like?
That’s why one company can command a 15x multiple and another struggles to get even 3x.
Profit is the entry ticket. Valuation tells you how attractive the business really is.
Why You Need to Know Your Value Even if You’re Not Selling
Raising Funds
Investors don’t care about gut feelings. They want numbers, backed by logic. Walking into a negotiation without a defensible valuation is like turning up for a cricket match without a bat.Partnerships & Mergers
Suppose a competitor wants to acquire you, or you are exploring a merger. Without a clear valuation, you are negotiating blind. The other party will anchor the price, and chances are you’ll undersell yourself.Negotiating Better Deals
Even outside of fundraising or M&A, valuation strengthens your position. For example, if a strategic partner wants equity in exchange for services, how do you decide what percentage to give? Valuation gives you the answer.Tax and Compliance
This one is often ignored. But regulators now demand fair valuations in multiple situations — share transfers, ESOPs, succession planning, even foreign investments. If you can’t justify your numbers with a proper report, you risk penalties or worse.
A Tool for Growth, Not Just Exit
Let me get one thing clear
Valuation is not about putting a price tag on your company.
It’s about understanding what drives that price.
When you do a serious valuation, you uncover things like:
Are your margins too thin compared to industry benchmarks?
Is your client concentration a risk?
Are your receivables stretching too long and hurting working capital?
Do you have the right structure in place to attract future investors?
In other words, valuation shines a light on your blind spots. It forces you to see the business from an outsider’s lens, which is exactly how the market will judge you one day.
A Real Example
I once valued a mid-sized software services company.
On paper, they were profitable and growing steadily.
The owner thought she’d easily fetch a premium if she sold.
But the valuation process showed something worrying: 70% of revenue came from just two clients. If even one left, the business would collapse.
That insight was a wake-up call. Instead of selling, the owner doubled down on diversifying her client base.
Two years later, the same company was valued at almost double… not because profits had skyrocketed, but because the risk profile had improved.
That is the power of knowing your value early.
How I approach Valuation
I don’t see valuation as a compliance tick-box. It is a strategy tool.
Our reports are designed not just for bankers or regulators, but for the business owners.
I focus on two things:
Accuracy: Your valuation must hold up under scrutiny - whether from an investor, a regulator, or a potential buyer.
Actionability: Every report should leave you with clear insights. What’s driving your value up? What’s dragging it down? Where should you focus next?
The goal is not just to tell you what your business is worth today.
It’s to show you how to make it worth more tomorrow.
The Takeaway
Business valuation is not just for the day you exit. It’s a mirror that helps you understand the true state of your company.
It shows you whether you’re building lasting value or just chasing short-term profits.
So, if you’re a founder, ask yourself: when was the last time you looked at your business through the lens of value, not just revenue and profit?
If the answer is never, now is the right time.
“Jab jaago tabhi savera hai”
Whether you plan to raise funds, bring in a partner, or one day sell, the market will judge your business by its value, not by your opinion.
And the earlier you know that number, the more control you have over your future.
As always…
To all those with a mission in life,
VijayBhava!
P.S. If you found this newsletter helpful, do share it across with your entrepreneur friends who will find this useful!
Thank you, and have a lovely weekend.