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Business Valuation Calculator

Estimate what a small business is worth from its Seller's Discretionary Earnings (SDE) and an industry multiple. Free, no signup, a ballpark to plan from.

SDE (annual)
$160,000.00
Estimated value (3×)
$480,000.00
Likely range
$400,000.00 – $560,000.00

Your SDE is $160,000.00, so at a 3× multiple the business is worth roughly $480,000.00. The real multiple depends on the industry, growth, how owner-dependent the business is, and clean books — a ballpark, not an appraisal.

A planning estimate, not a formal business appraisal or an offer. Real valuations weigh industry, growth, risk, and verified financials.

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How to use this business valuation calculator

Enter the business’s pre-tax net profit, the owner’s salary and benefits, and other add-backs (depreciation, interest, one-time costs, and personal expenses run through the business). The tool sums those into SDE — Seller’s Discretionary Earnings — then applies your multiple to estimate the value, with a likely range around it.

How small-business valuation works

A worked example

A shop with $50,000 of net profit that pays its owner $90,000 and has $20,000 of add-backs has an SDE of $160,000. At a 3× multiple that is roughly a $480,000 business, with a likely range of about $400,000 to $560,000 depending on how the buyer weighs the risk.

What moves the multiple

Two businesses with the same SDE can be worth very different amounts. A higher multiple comes from steady or growing revenue, low owner-dependence (the business runs without you), a diverse customer base, recurring revenue, and clean, verifiable books. A lower multiple comes from the opposite. This tool gives you a defensible starting number; a broker or appraiser refines it with comparables and verified financials. If you run a trade business, the free estimate tools and break-even calculator help you build the profit that drives the valuation in the first place.

Frequently asked questions

How do you value a small business?

Most owner-operated small businesses are valued on Seller’s Discretionary Earnings (SDE) times a market multiple. SDE is the pre-tax net profit plus the owner’s pay and add-backs (depreciation, interest, one-time costs, and personal expenses run through the business). Multiply that by an industry multiple — commonly 2–4× — to get a ballpark value. This tool does the math live.

What is SDE (Seller’s Discretionary Earnings)?

SDE is the total financial benefit a single full-time owner takes from a business in a year. You start with net profit, then add back the owner’s salary and benefits, plus non-cash and non-recurring items like depreciation, amortization, interest, one-time expenses, and personal costs run through the company. It normalizes the numbers so a buyer can compare businesses fairly.

What multiple should I use?

Small businesses commonly trade at about 2–4× SDE, but the real number depends on the industry, growth trend, how dependent the business is on the owner, customer concentration, and how clean the books are. A stable, transferable business with recurring revenue earns a higher multiple; an owner-dependent one earns less. Use the range this tool shows as a starting conversation, not a fixed price.

Why can SDE be positive when the business shows little profit?

Because owners often pay themselves a salary and run legitimate personal expenses through the business, which lowers reported profit but is real benefit to the owner. Adding those back is exactly what SDE does — it is a common reason a business that looks break-even on paper still sells for a meaningful amount.

Is this an official business appraisal?

No. This is a free planning estimate to give you a ballpark. A real valuation weighs verified financials, industry comparables, growth, and risk, and is usually done by a business broker or appraiser. Use this to get oriented before those conversations — it is not an appraisal or an offer.

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