How Much Is My Business Worth? Free Valuation Calculator

If you're asking "how much is my business worth?", the honest short answer is: your business is worth a multiple of its yearly profit, adjusted for how risky and transferable that profit is. For most small, owner-run companies, that lands somewhere between 2x and 3x of your annual earnings. A service business earning $150,000 a year for its owner is often worth roughly $300,000 to $450,000.

That's the ballpark. Below is a simple calculator you can run in a few minutes, plus the two methods professional buyers and lenders actually use so you understand where your number comes from.

The 3-Step Valuation Calculator

You don't need software to get a defensible estimate. You need three inputs.

Step 1 - Find your real earnings (SDE)

For businesses under roughly $1 million in revenue, buyers value you on Seller's Discretionary Earnings (SDE) - the total financial benefit one full-time owner takes out of the business.

Start with your net profit from your tax return, then add back:

• The owner's salary and payroll taxes
• One owner's benefits (health insurance, retirement)
• Interest and depreciation
• One-time or personal expenses run through the business (a personal vehicle, travel, that "consulting fee" to your cousin)

Net profit + owner's pay + add-backs = SDE.

Example: $60,000 net profit + $80,000 owner salary + $10,000 in add-backs = $150,000 SDE.

Step 2 - Pick your multiple

Now multiply SDE by a number that reflects risk. Based on thousands of completed small-business sales, SDE multiples generally range from 2.0x to 3.3x, with a market average around 2.57x (BizBuySell / industry data). Where you land depends on:

A clean, semi-absentee business with recurring revenue earns a 3x+ multiple. An owner-dependent shop with lumpy sales earns closer to 2x.

Step 3 - Do the math

SDE × Multiple = Estimated Business Value.

Using our example: $150,000 SDE × 2.7 = $405,000.

Add the market value of any inventory or major equipment that isn't already baked into that figure, and you have a working number.

SDE vs. EBITDA: Which Method Applies to You?

The calculator above uses SDE, which fits most Main Street businesses. Once a company gets larger - generally past around $2 million in earnings - buyers switch to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), because at that size a hired manager, not the owner, runs the operation.

• Under ~$1M revenue → use SDE. Multiples typically 2x-4x.
• $1M-$5M earnings → use EBITDA. Multiples typically 4x-8x (EBITDA multiple benchmarks).

The difference matters because SDE includes the owner's salary and EBITDA does not. Comparing an SDE multiple to an EBITDA multiple is apples to oranges. If you're not sure which earnings figure you're working with, our deeper walkthrough on how to value a business breaks down each add-back line by line.

Other Ways to Cross-Check Your Number

The earnings-multiple method is the backbone, but two other approaches are worth a sanity check.

Asset-based valuation. Add up what you own (equipment, inventory, receivables) and subtract what you owe. This sets a floor - useful for asset-heavy or unprofitable businesses, but it usually understates a healthy, profitable company because it ignores goodwill and customer relationships.

Market comparison. Look at what similar businesses in your industry and region actually sold for. Sites like BizBuySell publish sold-listing data. This is the same logic a real estate appraiser uses with comparable home sales.

If two of these three methods land in the same range, trust the number. If they diverge wildly, dig into why before you set a price.

What Actually Changes Your Valuation

The single biggest lever is reducing owner dependence. A buyer isn't purchasing your past profit - they're buying future profit without you in the chair. Document your processes, train a manager, and lock in recurring contracts, and you can move your multiple meaningfully in 12-18 months.

Other value drivers:

• Clean financials. Buyers and lenders discount messy books. Reliable accounting software that produces clean profit-and-loss statements pays for itself at sale time.
• Diversified revenue. No single customer should dominate your income.
• Documented systems. Written SOPs make the business transferable.
• A growth story. Even modest, consistent upward trend commands a premium.

If you're weighing a purchase from the other side of the table, the same math runs in reverse - our business acquisition guide covers how buyers stress-test a seller's asking price.

Why the Bank's Number Might Differ

If a sale involves financing, expect a formal appraisal. SBA-backed acquisitions require an independent business valuation, and SBA lenders' internal data pegs the median small-business sale at roughly 3.0x SDE (Reliant Business Valuation). A lender's appraiser will scrutinize your add-backs harder than you will - so keep every add-back documented and defensible.

Your calculator estimate is a starting point for negotiation, not an appraisal. The final price is whatever a real buyer will pay and a real lender will finance.

Quick Reference: Run Your Own Number

1. SDE = Net profit + owner's salary + add-backs
2. Multiple = 2x (owner-dependent) to 3.5x+ (turnkey, recurring revenue)
3. Value = SDE × Multiple + saleable assets
4. Cross-check against asset value and comparable sales

For a business with $200,000 SDE and clean books running semi-independently, a 3x multiple gives a $600,000 estimate - a number you could confidently take into a conversation with a broker or buyer.

Conclusion

"How much is my business worth?" comes down to your true earnings, a risk-adjusted multiple, and a couple of cross-checks. Most owners can get within a realistic range in under ten minutes using the SDE method above - and then spend the next year improving the inputs that actually move the multiple.

Ready to raise your number? Start by cleaning up your financials this quarter, then re-run the calculator in six months and watch the estimate climb.

Sources: Peak Business Valuation, Reliant Business Valuation, Sofer Advisors EBITDA benchmarks.