Most business owners in Oklahoma work incredibly hard to increase their bank balance, but they often neglect the actual asset that generates that cash. There is a significant difference between making a good living and building something that a third party would pay a premium to own. When you focus on how to increase business value, you aren't just looking at this year's tax return; you are looking at the structural integrity of your enterprise.
Working in a family business that grew from $6M to $11M in annual revenue taught me that growth alone doesn't always equal value. If you double your revenue but become twice as stressed and the business relies more on you than ever, your company might actually be worth less to an acquirer. True value comes from predictability, sustainability, and the ability of the company to function without the founder.
Increasing value is a two-part equation: growing your earnings (SDE or EBITDA) and expanding the multiple that a buyer is willing to pay for those earnings. A company making $1M in profit with a 3x multiple is worth $3M. If you improve the quality of the business and push that multiple to 4x, you’ve increased the value by $1M without even growing the bottom line. My goal is to show you how to pull both levers simultaneously.
Why This Matters
For most Oklahoma business owners, their company is their largest financial asset. Yet, many treat it like a high-paying job rather than an investment. If 80% of your net worth is tied up in your business, the "multiple" is the most important number in your life.
A higher valuation gives you options. Whether you want to pass the business to your children, sell to a competitor, or step back into a chairman role while a manager runs the day-to-day, a high-value business provides freedom. Markets shift, and industries consolidate. When you understand how to increase business value, you insulate yourself against economic downturns because "A-grade" businesses always find buyers, even in lean times.
Furthermore, a business built to sell is simply a better business to own. It is organized, profitable, and less chaotic. Even if you never plan to exit, the process of preparing for one will improve your quality of life today.
Common Mistakes
The biggest mistake I see is "Owner Dependency." If you are the lead salesperson, the head project manager, and the only one with the keys to the server room, you don't have a business; you have a job with a lot of overhead. A buyer isn't going to pay you for your own labor; they are paying for a machine that produces cash. If you leave and the machine breaks, the value vanishes.
Another common pitfall is poor financial hygiene. Many owners run personal expenses through the business to minimize their tax burden. While this might save you a few dollars in April, it can cost you hundreds of thousands during a sale. When a business broker or an M&A firm looks at your books, they want to see clean, verifiable Seller's Discretionary Earnings (SDE). If they have to hunt through a shoebox of receipts for "travel and entertainment" that was actually a family vacation, they will likely discount your valuation or walk away entirely.
Customer concentration is a silent killer in the Oklahoma market. I’ve seen $10M companies where 60% of the revenue came from one major oil and gas client or one specific general contractor. If that client leaves or goes bankrupt, your business collapses. No sophisticated buyer will take on that level of risk without a massive haircut on the price.
Finally, many owners focus on "top-line" revenue as a vanity metric. Revenue is irrelevant if your margins are eroding. A $5M business with a 20% net margin is significantly more valuable and easier to manage than a $10M business with a 5% margin.
Best Practices
To move the needle over the next 12 months, you need to focus on "Multiple Drivers." These are the traits that make a buyer feel safe.
1. Focus on Recurring or Re-occurring Revenue The "Holy Grail" of valuation is a contractual recurring revenue stream. If you are a service provider, can you move customers to a maintenance plan? If you are in manufacturing, can you secure long-term supply agreements? Even if it isn't a legal contract, "re-occurring" revenue—where customers naturally return through a programmed habit—is far more valuable than "project-based" work where you start every month at zero.
2. Clean Up Your Financials Start treating your P&L like a public document. Ensure you are using accrual-based accounting if you are over $3M in revenue. Work with a specialized CPA to identify legitimate "add-backs." These are one-time or non-operational expenses—like a one-time legal fee, your personal vehicle, or a salary for a family member who doesn't work in the business—that can be added back to your net income to show the true EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
3. Build a "Second Layer" of Management You need people who can make decisions in your absence. This doesn't mean you need a high-priced C-suite immediately. It means having a shop foreman, a lead office manager, or a sales head who owns their KPIs. When a buyer sees a deep team, they view the acquisition as much lower risk.
4. Document Your Processes Standard Operating Procedures (SOPs) are the "owner's manual" for your business. When your processes are documented, you become replaceable. This is a core component of business growth partner services—moving the "know-how" from the owner's head into a system that can be taught to any competent employee.
5. Diversify Your Customer Base Aim for no single customer representing more than 10-15% of your total revenue. If you have a whale, don't fire them—but focus all your new sales efforts on smaller accounts to dilute that concentration over time.
Real-World Examples
I worked with a service-based company in the Tulsa area that was doing roughly $4M in revenue. The owner was the primary salesperson and handled all the high-level bidding. Because he was so integral, he was hitting a ceiling. He couldn't grow more because he didn't have more hours in the day.
We focused on hiring a dedicated sales lead and implementing a CRM to track the pipeline. Initially, the owner’s "EBITDA" went down because he was paying a new salary. However, the next year, revenue jumped by 30% because the salesperson was focused on it 40 hours a week. More importantly, the multiple of the business increased. Because it no longer required the owner to sell, the business became attractive to an out-of-state private equity group rather than just a local individual.
In another instance, a manufacturing client realized they had three different product lines. One was "high volume, low margin" and another was "low volume, high margin." By shifting their marketing focus to the high-margin line, they grew their bottom line by $200k in 12 months without hiring a single new person. That $200k increase, at a 4x multiple, added $800k to the total value of the company.
Action Steps
- Get a Baseline Valuation: You can't improve what you don't measure. Get a professional opinion of value to understand where you sit today.
- Identify Your Add-Backs: Review your last three years of tax returns. Highlight every personal expense, one-time repair, or over-market salary. This is your "hidden" value.
- Perform a "Vacation Test": Try to leave the business for two weeks with zero contact. Note everything that breaks. Those points of failure are your roadmap for process improvement.
- Analyze Your Margins: Run a report on your most and least profitable customers. Consider "firing" the bottom 10% of customers who take up 90% of your time but contribute little to net profit.
- Audit Your Real Estate: If you own the building your business operates in, ensure you have a formal lease at market rates. This separates the business value from the commercial real estate value, which is vital for a future sale or refinancing.
Frequently Asked Questions
What is the difference between SDE and EBITDA?
SDE (Seller’s Discretionary Earnings) is typically used for businesses worth less than $2M, as it includes the owner's salary and benefits back into the profit. EBITDA is used for larger companies and assumes a professional manager is being paid a market salary to run the day-to-day operations.
How long does it take to increase a business multiple?
While some changes show immediate results, most multiple expansion takes 12 to 24 months. It takes time to prove that a new management team is stable or that a new recurring revenue stream is consistent.
Will a messy warehouse decrease my business value?
Yes. First impressions matter. While a messy shop might not change the EBITDA, it signals to a buyer that the business is managed sloppily. This leads to "due diligence fear," where a buyer assumes if the shop is messy, the financials might be too.
Does Oklahoma location affect my valuation?
Generally, Oklahoma has a lower cost of doing business, which is a plus. However, being heavily tied to a single local industry (like oil and gas) can lead to more volatile valuations compared to businesses with national or diversified local footprints.
Conclusion
Increasing the value of your business is a deliberate process. It requires moving from the mindset of an operator to the mindset of an investor. By focusing on owner independence, recurring revenue, and financial clarity, you aren't just making your business "sellable"—you are making it more profitable and less stressful to run right now.
Most owners wait until they are burnt out to think about valuation. By then, they've lost their leverage. Start the process today while things are going well, and you will ensure that when it comes time to move on to your next chapter, you receive the full exit value you've earned.
Schedule a Consultation
If you are ready to move beyond just "operating" and start building real enterprise value, let's talk. Whether you need a comprehensive Business Growth Review to identify your current leaks or you want to discuss how your company would currently perform on the market, I can help. Schedule a consultation today to start a conversation about your business's future.
About John Hamill
John Hamill is a Business Growth Partner, Business Broker, and Commercial Real Estate Advisor who helps Oklahoma business owners increase business value, improve operations, and prepare for growth, acquisition, or exit.