Calculate The Value of Your Business

Most small businesses are priced as a multiple of their earnings. This calculator uses that same logic: it takes your SDE (Seller's Discretionary Earnings) and multiplies it by a market-based multiple to produce a value range. The formula is Valuation = SDE × (Blended Multiple ± Deviation). The multiple isn't a fixed number. It's drawn from what similar businesses in your specific industry are actually listed for, then fine-tuned by the qualities that drive buyer demand. Run it early on any business you're weighing, and you'll have a realistic ballpark before you dig into the details.

An SDE multiple is simply the price of a business expressed as a number of years of its earnings. A business with $300,000 in SDE that sells for $900,000 changed hands at a 3.0× multiple. It's the small-business equivalent of the price-to-earnings ratio you'd see on a public stock.

Multiples matter because they're the common language of business pricing. They let you compare a landscaping company to a coffee shop on equal footing, and they're how brokers, buyers, and lenders all frame value. Most Main Street businesses trade somewhere between 2× and 4× SDE, but where a specific business lands inside (or outside) that band depends heavily on its industry and its risk profile.

This calculator is built on asking prices, so the multiples reflect what sellers are currently and recently listing their businesses for on BizBuySell, not what those businesses ultimately sold for. That makes it a great tool for understanding where the market is setting expectations, and for pricing a business you're about to bring to market.

It's important to know the difference, though: businesses typically sell for less than they ask. If you want a value grounded in recent closed transaction multiples instead, use BizBuySell's BizWorth valuation tool, which includes localized sales data. Think of this calculator as the "list price" view and BizWorth as the "closed price" view.

Seller's Discretionary Earnings (SDE) is the total financial benefit a single owner-operator receives from a business in a year. It's the standard earnings measure for pricing Main Street businesses. You build it up from net profit by adding back the discretionary and non-operating items a new owner wouldn't necessarily carry:

• Owner's salary and payroll taxes: The compensation the current owner pays themselves.
• Owner benefits and perks: Health insurance, vehicles, travel, phone, and similar personal-use expenses.
• Interest, depreciation, and amortization: Non-cash and financing items added back to reach operating cash flow.
• One-time or non-recurring costs: A lawsuit, a move, a major repair that won't happen again.

Enter a conservative, defensible SDE for the most accurate estimate. Padding it with aggressive add-backs only inflates the result, and any serious buyer or lender will strip those back out.

Not all earnings are valued equally. A dollar of profit from a business with recurring contracts, low owner dependence, and steady growth is worth more to a buyer than a dollar from a volatile, hands-on operation that will eat up the new owners time. The market pays a higher multiple for "easy, consistent cash flow".

Every industry has its own structural realities: typical margins, capital needs, competitive dynamics, and how easily a business transfers to a new owner. Those differences show up directly in pricing — an auto repair shop and a software company simply trade at different multiples. That's why the calculator anchors your baseline on industry-specific multiples rather than a one-size-fits-all figure, giving you a more precise starting point.

Pick the industry that fits best. If your business doesn't map cleanly to one, choose the sector-wide option at the top of the list to use the whole sector's multiples instead. This will give you a broad view.

Two businesses in the same industry with identical SDE can be worth very different amounts. The five sliders capture the qualities that explain the gap, accounting for the things buyers reward or penalize. Each one nudges your multiple toward the lower quartile, median, or upper quartile:

Alongside these five sliders, the calculator adds two automatic value levers; your Annual Revenue and SDE, each benchmarked against your industry's quartiles. See the next question for how all seven inputs combine.

Play with the sliders to see how each quality moves your range and to spot which improvements would most lift a business's value before a sale.

The five sliders aren't the only things shaping your multiple. The calculator also takes your Annual Revenue and SDE and benchmarks each against the real quartiles for your chosen industry (the same lower-quartile, median, and upper-quartile figures shown in the Financial Benchmarks section).

Within any industry, larger and more profitable businesses tend to command stronger multiples. So the calculator treats these two figures as automatic value levers: land above your industry's upper quartile and your multiple is nudged up; fall below the lower quartile and it's pulled down; sit in between and it stays near the median.

SDE is a required field, so its benchmark always counts. Annual Revenue is optional. If you leave it blank, the calculator simply leans on the remaining inputs (and the SDE margin readout shows N/A). When you do enter both, revenue and SDE together also produce your SDE margin, which is benchmarked the same way and shown as an output.

Not every input carries equal weight. Your growth trend and financial figures move the multiple more than the other drivers, so improvements there tend to have the biggest effect. The next question breaks down exactly how each factor is weighted and why, and the sliders let you see each input’s impact as you adjust it.

The blended multiple isn't a simple average of every input — each of the seven value levers is given a share of influence, because in the real market some qualities move a sale price more than others. A strong five-year growth trend or an above-average revenue figure tends to reshape buyer demand far more than, say, whether a license is required to operate. So the levers that history shows matter most are given the most pull:

The reasoning behind the ranking is straightforward: growth signals where the business is headed, and revenue and SDE establish its size and earning power — the fundamentals buyers scrutinize first. Owner involvement and revenue durability speak to how transferable and reliable those earnings are. Buyer qualifications and financial records still matter — they widen the buyer pool and build trust in the numbers — but they tend to fine-tune a price rather than set it.

Because no business has a single "true" price. Even businesses that look identical on paper sell across a spread, depending on terms, timing, buyer motivation, and negotiation. Showing a range is simply more honest than a false-precision single figure.

The calculator centers on a blended multiple based your industry's median and then applies the typical deviation seen in that industry to set the top and bottom of your range. Treat the middle as your anchor and the edges as the realistic zone a deal could land in. When you're negotiating, the range is more useful than the midpoint — it tells you where you have room to move.

Nine times out of ten, a surprising result traces back to one of the inputs. Before you trust the number, sanity-check these:

• Your SDE figure. This is the single biggest driver. An SDE that's inflated by aggressive add-backs (or understated by missing them) will throw off everything downstream.
• The sector and industry you chose. Many businesses could plausibly sit in two categories; picking the closer-fitting industry matters. If none fits cleanly, the sector-wide "All …" option is a safer bet.
• The value levers. Be honest here. It's tempting to set every slider to the top, but a realistic read gives you a realistic number.

It's a solid directional estimate. Good enough to tell you whether a business is roughly in your budget, or whether your asking price is in a sane range before you list. It's built on real market multiples, so it reflects how businesses are actually being priced today.

What it can't do is see inside a specific business. It doesn't know about a make-or-break customer concentration, a below-market lease about to reset, aging equipment, or a looming competitor. Those factors can move real value well outside the calculated range. Use this to get oriented quickly, then rely on financial due diligence, and a professional valuation for big businesses you're serious about, to pin down the number.

No. This tool provides educational estimates only, based on current and recent asking prices. It is not a formal appraisal, not a guarantee of value, and not an offer to buy or sell. Actual sale prices depend on verified financials, market conditions, deal terms, and buyer demand, and are typically lower than asking prices. For a transaction, a lease negotiation, financing, or tax and legal purposes, always confirm value with a qualified business appraiser, broker, and your CPA.