Is AI Making Your Business More Valuable or More Dependent on You?
Over the last couple of years, Claire has invested in AI tools that have transformed how her physiotherapy practice operates. From bots that handle inquiries to automated scheduling and invoicing, these changes have improved the bottom line. The practice has increased capacity without growing headcount, and Claire can take on more patients.
By most measures, this is what business improvement should look like. But if you’re a business owner who resonates with this story, you need to be aware of an important consideration.
What is a business worth?
Business valuation reflects more than current profitability. A buyer is purchasing last year’s results and the future earnings they expect the business to generate after they take over.
The concept of future maintainable earnings assumes that the systems, processes, and people producing those earnings today can keep producing them once the current owner has left. If they can't, the earnings aren't fully maintainable, and the valuation is adjusted accordingly.
This has always been the challenge of owner-dependent businesses. But AI and automation have introduced a new dimension to that challenge.
When you’re the owner and the architect
Most business owners who've built effective AI systems and automations have done so incrementally. A tool here, a workflow there, a custom integration that solved a specific problem at a specific moment. Over time, these pieces connect into something valuable, but complex.
The question is: who else understands how it works?
If you’re shrugging your shoulders thinking, well, me, that can be a problem. A business where the owner built the automation, maintains it, troubleshoots it when it behaves unexpectedly, and is the only person who could rebuild it if something broke has a new key-person risk.
Traditionally, key person risk is about relationships, skills, and knowledge walking out the door. AI-dependent businesses may add another layer. The risk that the infrastructure itself becomes inaccessible or unmanageable without the person who built it.
Documentation along the way is essential
When someone buys a business, buyer’s due diligence is increasingly including questions about the systems the business runs on, including AI or self-developed automation. How they work, who manages them, what happens when something goes wrong, and whether a reasonably capable person could take them over.
Documentation is the obvious answer, but it often happens in a rush at the end of a sale process and sometimes years after the fact. This means the logic and rationale behind why these systems were introduced can get lost, making a handover document much less useful.
If you’re thinking about selling your business in the next few years, and even if you’re not, think about transferability when you add the next AI tool. Consider the question: could someone else run this? Use this as a starting point when designing the solution and document as you go.
A new consideration for business owners
None of this means you shouldn’t use AI or automation. The efficiency and profitability gains are real, and these tools can put your business in a better position.
But ensure that any new systems are part of the business and not an extension of you. The former adds value. The latter, however sophisticated, may, on closer inspection, represent a form of owner-dependence that a valuation will need to account for.
If selling your business is on the medium-to-long-term horizon, ask these questions
Are our AI tools and automations documented in a way someone else could follow?
If a key system broke tomorrow, who could fix it?
Are our workflows embedded in the business, or embedded in the way I personally work?
If a buyer asked to see how our systems operate, would I be able to show them clearly?
This is new territory for business valuation. But the owners asking these questions now are better placed than those who aren't asking them at all.
How we help
At Accounting Heart, we work with established business owners on the financial foundations that support long-term value. Whether that's understanding what your business is currently worth, identifying what's affecting its value, or helping you think through what a future transition might look like.
If that sounds like a conversation you’d like to explore, we’d welcome the opportunity.
Book a no-obligation discovery call.
Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and/or other advice as may be appropriate having regard to their particular circumstances.