Where Will Your Business Be in Five Years? Start With a Business Valuation

 

Picture a diner booth, a half eaten plate of eggs, and an owner sketching the next five years on a napkin. Revenue climbs here, a second location appears there, and a retirement date sits in the corner with a circle around it. It’s a good napkin. The trouble is, it starts from a number the owner has never actually checked.

So can you plan five years out without knowing today’s number? Not very well. A business valuation fixes the starting line, and your enterprise value is the figure a forecast grows from. Chartwell Value puts a five year forecast right in its toolkit, and it’s worth seeing how the pieces fit together.

Start with where you are today

Napkin plans usually skip the dull part. Before projecting anything, the site says to pull clean, normalized earnings out of your P&L, because those are the true starting point of value. Skip that step and a forecast turns into a wish with a spreadsheet wrapped around it. That’s how a lot of them end up, and the owner usually finds out the hard way.

Next comes the second step, your enterprise value today, calculated the way buyers see it. Think of it as the first dot on a graph. Without a first dot, you can draw all the lines you like, but nobody can tell whether they point up, down or sideways. The site treats it as step two for a reason.

What a five year forecast actually does

Looking forward from clean numbers

The page describes the forecast as projecting tomorrow’s earnings to see where your value is headed. The word that matters is earnings, not sales. A forecast of revenue alone can look wonderful while the profit underneath stays flat, and profit is what a buyer cares about. It isn’t a promise, just a reasoned look ahead, and a pretty honest one when the earnings underneath are clean.

Say your forecast shows earnings rising for three years and then flattening. That’s useful, not scary. It tells you something about the business, maybe a limit on capacity, maybe an owner who can only do so much. Better to see that flat line on paper now than to discover it after you’ve bet a retirement date on it.

Matching years to stages

Here’s a way to read a forecast against the site’s four stages. Say you’re in year 7. That puts you in Optimize, which runs from years 5 to 10, and five years later you’d be at year 12, inside Scale, which covers years 10 to 15. Different stage, different job, and a different answer to what the business needs from you by then.

By the end of Optimize, the site wants the nine drivers strong and the business running without you. Inside Scale, it wants growth that repeats without you driving it. So a five year plan isn’t only about bigger numbers. It’s about a business that needs you a little less each year, which is a much better story to tell a buyer.

The multiple in the background

What the market might pay

A forecast gives you earnings. The market supplies the other half. The site’s multiples step benchmarks your business against what the market is actually paying, and it has a whole page on what sets your multiple. The page doesn’t hand out a formula, so I’ll stay out of the arithmetic. What it does make clear is that both halves matter.

Say two owners forecast the same earnings for year five. One runs a business that carries on without them, and the other can’t take a week off. Same line on the graph, but I’d expect a buyer to read them differently. That’s my read, not something the page spells out as arithmetic.

Where a business valuation helps

This is where a business valuation earns a spot on the calendar. It ties clean earnings, a forecast and a market benchmark together, so the napkin sketch turns into something you can show anyone who asks, without crossing your fingers or apologizing for the rough edges. A page of clean numbers calms a room faster than any pitch.

Run it once and you have a baseline. Run it again in a year and you can see whether the plan is working. If it isn’t, the optimization step is there to close the gap, pinpointing the levers that raise your exit value. Five years is long enough to fix a lot, but only if you start early.

A reality check on the long game

Five years can feel short and long at once. The page cites BLS data showing only 34.7% of businesses are still going at ten years, and 25.5% at fifteen. A forecast can’t change those odds on its own. What it can do is make sure you’re planning on purpose, with clean books and a number to measure against, instead of hoping the years sort themselves out.

The same data shows 19.5% still going at 20 years and 12.6% past 30. Those aren’t there to scare anyone. They show how long the game runs, and how much of it gets played after the early years. The average age of 12 years, from SBA Office of Advocacy data for 2024, sits somewhere in the middle of that.

Back to the napkin

Keep the napkin. Seriously. It’s got your goals on it, and that matters. Just add a number to the top corner, the one you get from a real enterprise value and a proper business valuation, and let the plan grow from there. Chartwell Value is based in Austin, TX, and its Get Your Value button is a decent place to start.

FAQs

What is a five year forecast?

It’s the page’s step for projecting tomorrow’s earnings to see where your value is headed. It builds on the clean earnings in your P&L, not on guesses, so the quality of your books shapes the quality of the forecast.

Do I need a business valuation before a forecast?

It helps a lot. The valuation gives you the starting point, a clear enterprise value today, and the forecast shows where that figure could go. Without the first, the second has nothing solid to grow from.

How do the four stages fit a five year plan?

The first three stages each span about five years, from Build at years 0 to 5 to Scale at 10 to 15. So five years ahead often means moving into the next stage.

Is a forecast a promise?

No. It’s a reasoned look ahead built from earnings you can defend. Use it to spot gaps early, not to guarantee an outcome, and update it when real results come in.

Where do I start?

Start anywhere, the site says, since every section feeds your number. If your books are tidy, try the forecast first and see what it shows. The P&L is a natural first step, and from there the site’s six steps follow in order.