Business Valuation Calculator
I built this tool to help you answer the most important question for any entrepreneur: "How much is my business actually worth?"
Business Valuation Calculator
Based on SDE / EBITDA Multiples
Total sales before expenses.
Use SDE for small businesses, EBITDA for larger ones.
Healthy Small Business / Average
Estimated Business Value
Calculation: $250,000 × 3x
Quick Analysis
Business Valuation Calculator in 3 Simple Steps
I've simplified the complex world of business appraisal into three easy steps. Here is how it works.
1. Enter Financials
Input your Annual Revenue and Profit. For small businesses, use SDE (Seller's Discretionary Earnings). for larger ones, use EBITDA.
2. Choose Multiplier
Select a valuation multiplier based on your industry, growth rate, and stability. I've included hints to help you pick the right number.
3. See Your Value
Instantly see your estimated business valuation. Use this ballpark figure to start planning your exit strategy or growth targets.
Why I Built This Tool
Valuing a small business often feels like a dark art. You hear stories of tech startups selling for 20x revenue, while local cafes sell for 1x profit. It's confusing.
I created this calculator to demystify the process. Most small-to-medium businesses are valued based on a simple formula: Profit x Multiplier. By understanding this, you can stop guessing and start building real value.
SDE vs. EBITDA: Which Do You Need?
One of the biggest mistakes I see is using the wrong profit number. Here is the difference:
SDE (Seller's Discretionary Earnings)
Best for: Businesses with <$2M Revenue.
This adds back your salary, personal perks (like your car lease), and one-time expenses to the Net Profit. It shows the total cash flow available to an owner-operator.
EBITDA
Best for: Businesses with >$2M Revenue.
Earnings Before Interest, Taxes, Depreciation, and Amortization. This is a more standardized metric used by professional buyers and Private Equity firms.
The Magic of the "Multiplier"
The "Multiplier" is where the art meets the science. It represents the risk and growth potential of your business.
A multiplier of 2x means a buyer thinks it will take 2 years to get their money back. A multiplier of 5x means they are willing to wait 5 years because the business is safer or growing faster.
- 1x - 2.5x:High Risk / Job: The business heavily relies on you (the owner). If you leave, the business crumbles.
- 2.5x - 4x:Average Small Business: You have some staff, systems in place, and consistent profits.
- 4x - 6x+:Strategic Asset: High growth, proprietary technology, strong management team (not just you), and recurring revenue.
How to Increase Your Valuation
Want to sell for more? You have two levers to pull: increase your **Profit**, or increase your **Multiplier**.
Increasing profit is obvious (sell more, spend less). But increasing your multiplier is often easier and more powerful.
To get a higher multiplier, start "firing" yourself. Build systems and hire managers so the business can run without you for a month. The less the business needs you, the more valuable it is to someone else.
Frequently Asked Questions
Is this valuation 100% accurate?
No online calculator provides a certified appraisal. This is a 'Rule of Thumb' estimate intended to give you a realistic ballpark figure. For a formal valuation (usually required for bank loans or legal disputes), you should hire a certified business appraiser.
Does this include inventory?
Typically, small business valuations are 'Inventory Plus'. This means you calculate the value using the multiple, and then add the cost value of your current inventory on top of that number.
What about my debts?
Most small business sales are 'Cash Free, Debt Free'. This means you (the seller) keep your cash, but you also pay off your own business debts at closing. The buyer gets the assets free and clear.
Why is my revenue multiple different?
Revenue multiples are rarely used for small businesses unless they are high-growth SaaS (Software as a Service) companies. For 95% of businesses, buyers care about Profit (Cash Flow), not just top-line Revenue.
How does the Rule of 40 apply?
The Rule of 40 is a SaaS metric. It states that your Growth Rate % + Profit Margin % should equal 40 or more. If your business hits this, it likely commands a premium software multiple (often 5x-10x Revenue, not profit!).
Ready to Build More Value?
Knowing your number is just the start. Use this tool to track your progress as you grow your revenue and optimize your operations.
Calculate My Valuation