How This Calculator Estimates What Your Business Is Worth

There is no single “true” number for a private business — only a defensible range that different buyers will land on for different reasons. That is why this tool doesn’t give you one figure. It runs your inputs through up to four established valuation methods, then narrows the range as you add detail. Here is what each method actually does, and when it matters most.

1. SDE Multiple (Seller’s Discretionary Earnings)

This is the workhorse for most small businesses under roughly $1M in earnings. SDE takes your net profit and adds back the owner’s salary, benefits, and one-time or personal expenses run through the business — the “discretionary” money a new owner could redirect. That SDE figure is multiplied by an industry multiple (typically 1.5x–4x) to reach a value. If you’re an owner-operator, this is usually the number that matters most.

2. EBITDA Multiple

Once a business clears about $1M in earnings and has a management team in place, buyers shift to EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization. It strips out financing and accounting choices to compare businesses on operating performance alone. Mid-market and strategic buyers think in EBITDA multiples, so this method carries more weight the larger and more systematized you are.

3. Asset-Based

This method values the business as its total assets minus total liabilities. It sets a practical floor — a profitable business is almost always worth more than its balance sheet — but it’s the most relevant lens for asset-heavy operations (manufacturing, equipment-based trades) or for a business whose earnings don’t yet justify a premium.

4. Revenue Multiple

For high-growth or recurring-revenue businesses — SaaS, subscription, and some e-commerce — buyers sometimes pay a multiple of revenue rather than profit, betting on future earnings. It’s the least conservative method and only sensible where growth and retention are genuinely strong, which is why the calculator leans on it only when your inputs support it.

A Quick Worked Example

Say you run a trade-services business with $900,000 in annual revenue and $180,000 in net profit. You pay yourself a $90,000 salary and run about $20,000 of personal expenses through the business. Your SDE is roughly $180,000 + $90,000 + $20,000 = $290,000.

Apply a typical trade-services multiple of 2.5x and you’re near $725,000. Now the quality factors bite: if you personally hold every customer relationship and your top client is 40% of revenue, a buyer discounts toward the low end. But if you have a foreman who runs jobs without you and no client exceeds 15% of revenue, that same business pushes toward — or past — the high end of the range. Same profit, six-figure difference. That gap is the real reason to know your number early.

Frequently Asked Questions

How accurate is an online business valuation?

Think of it as a well-informed estimate, not an appraisal. A calculator applies real industry multiples to the numbers you enter, so the more detail you provide, the tighter the range. But it can’t see your books, your contracts, or your local market the way a broker or certified valuator can. Use it to get oriented and to test “what if” scenarios — then get a formal opinion before you actually transact.

What’s the difference between SDE and EBITDA?

Both measure earnings, but for different sizes of business. SDE adds the owner’s salary and perks back in, because in a small owner-operated business those are discretionary — it answers “what would this business earn for a hands-on new owner?” EBITDA assumes a management team is already paid for and measures pure operating performance. Small businesses are valued on SDE; larger ones on EBITDA.

What multiple should my business sell for?

It depends heavily on industry and quality. Most small businesses trade between 2x and 4x SDE; software and recurring-revenue businesses can command far more. Within your industry’s range, recurring revenue, low customer concentration, consistent growth, and an owner-independent operation push you toward the top. The reverse pushes you to the bottom.

Why does customer concentration lower my value so much?

Because it’s risk. If your top one to three customers are half your revenue, a buyer knows that losing a single relationship after the sale could gut the business. Diversified revenue is more durable, and buyers pay for durability. Reducing concentration is one of the highest-leverage things you can do to raise your valuation.

How can I increase my business’s value before selling?

Focus on the factors buyers reward: build a team so the business runs without you, convert one-time work into recurring contracts, diversify your customer base, and keep clean, verifiable financials for at least two to three years. These moves take time, which is exactly why knowing your number today — even years out — is worth the ten minutes.

This calculator and guide are for informational purposes only and do not constitute a formal appraisal or financial advice. For a certified valuation, consult a Certified Business Valuator (CBV) or an experienced business broker.