How the calculator works
It adds your net profit, one owner's pay and benefits, depreciation, interest, and one-time expenses. That total is seller's discretionary earnings, or SDE: what one owner-operator takes out of the business in a year.
It then multiplies SDE by a multiple between 1.5 and 3.5, the broad range for owner-run businesses in the United States. Your five answers decide where in that range you land. The full method, with a worked example, is in How to Value a Business for Sale.
What it cannot tell you
Your industry, your town, and the year all move the number. A broker who knows your industry has sold-business data this page does not. This is general information from an owner's point of view. It is not an appraisal and not legal, tax, or valuation advice. See the terms and disclaimer.
Changing the number
Learning the number is the easy part. The Exit Readiness Review gives you an operator's value range and the specific list of what is discounting it, in order, so you can fix it before you sell. Start with how to sell a small business if a sale is still a few years out.
Common questions
How do I figure out what my business is worth?
For most owner-run businesses, add your net profit, one owner's pay and benefits, depreciation, interest, and one-time expenses to get seller's discretionary earnings (SDE). Multiply SDE by a multiple, usually 1.5 to 3.5, that reflects how risky the business looks to a buyer.
Is this calculator a formal valuation?
No. It is an owner's first read using the same method buyers and brokers start with. For tax, legal, divorce, or financing purposes you need a credentialed appraiser.
Why is my multiple low?
The most common reasons are that the business depends on the owner, one customer makes up too much of revenue, there is little repeat revenue, earnings are flat or falling, or the books are hard to verify. Each of these can be fixed before a sale.
Is a business worth a multiple of revenue?
Rarely. Buyers pay for earnings. Two businesses with the same revenue and different profit are worth very different amounts.