The Intent
You have suffered a fire, flood, shutdown, or other insured event and want to be compensated fairly for what the business actually lost.
How I Solve It
I apply the 25 Factors Affecting Business Valuation to identify lost income, lost market position, and disruption to operations. I focus on Factor #4: Return on Investment, Factor #14: Client Base, Factor #6: Utility, Sustainability, and Scalability, and Factor #24: Risk.
The 5 Senses Inspection Report documents how operations, staff behavior, customer flow, and physical condition changed before and after the event.
Experience
It is vital because "How is business interruption loss calculated?" is not a mechanical calculation. It is a real-world judgment about risk, control, sustainability, and transferability — and that judgment is where 10–15 years of owner-operator and valuation experience, your gut–brain axis, does the heavy lifting.
Why It Is Not Mechanical
On paper, valuation appears formula-driven. In reality, governance rights, risk concentration, growth durability, market conditions, and stakeholder dynamics materially affect value.
Where Experience Changes the Number
Decisions around normalization, premiums, discounts, projections, and defensibility require judgment formed through lived ownership, negotiation, and financial accountability.
Why the Gut–Brain Axis Matters
The brain performs disciplined financial analysis. The gut recognizes unrealistic narratives, hidden leverage, emotional distortions, and deal risk. Together they produce conclusions that withstand scrutiny.
Protecting Financial Lives
The final number affects wealth, control, solvency, tax exposure, and long-term relationships. Requiring 10–15 years of serious hands-on business and valuation experience ensures the answer is fair, defensible, and durable. See my Experience page.
The Result
You receive a business interruption calculation that reflects true economic loss, not just mechanical formulas.