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Business Valuation Calculator — What Is My Business Worth?

Estimate your business value using the SDE (Seller's Discretionary Earnings) multiple method — the industry standard for Main Street and lower middle-market businesses.

Annual Revenue ($)

Net Profit ($)

Owner Salary / Draw ($)

Add-Backs / Non-Cash ($)

Industry

Annual Revenue Growth (%)

% Recurring Revenue

Customer Concentration Risk

SDE (Seller's Discretionary Earnings)

$350,000

Conservative

$588K

Base Case

$938K

Optimistic

$1.29M

Rev Multiple

$1.20M

Valuation Range

Business Quality Score

Analysis & insights

SDE (Seller's Discretionary Earnings) of $350,000 (23.3% of revenue) drives your business's valuation. Conservative case: $588,000. Base case: $938,000. Optimistic: $1,288,000. Revenue-multiple cross-check (for Professional Services): $1,200,000. Real-world sale prices depend heavily on customer concentration, recurring revenue, growth trajectory, owner dependency, and the buyer pool. These estimates are a starting range — get a formal valuation before listing.

Lower middle market

Bigger pool of professional buyers (PE, search funds, family offices). Multiples typically higher than Main Street.

Risk & benchmark gauge

Current band

Sub-Main Street

Base valuation: $938,000

0255075100

Sub-Main StreetMain StreetLower middleMiddle market

Industry benchmarks

SDE$350,000
SDE margin %23.3%
Conservative valuation$588,000
Base-case valuation$938,000
Optimistic valuation$1,288,000
Revenue multiple check$1,200,000

Key insights

SDE > earnings > EBITDA

SDE adds back owner salary + benefits + discretionary expenses (the buyer can keep or eliminate). Used for owner-operated businesses. EBITDA is for businesses sold to non-operators (PE, strategic buyers).

Customer concentration kills multiples

One customer = 40%+ of revenue typically cuts multiple by 30-50%. Diversify revenue 12-24 months before listing.

Recurring revenue gets a premium

SaaS, subscriptions, contract-based revenue earn higher multiples than transactional revenue. Even partial-shift to recurring (50%+) materially lifts valuation.

Owner-dependency limits buyer pool

If the business relies on YOU specifically (relationships, technical skill, personality), most buyers walk. Building systems + a #2 leader before listing expands the buyer pool dramatically.

Recommended actions(5)

Get a formal valuation before listing

High priority

Business valuators ($2-10K) or business brokers (free, but conflicted) can give a precise number. The range above is a starting point only.

Clean up the books 12-24 months pre-sale

High priority

Buyers want 24+ months of audited or reviewed financials. Discretionary expenses (personal-use car, family payroll, sponsorships) need clear add-back justification.

Impact: Clean books = higher multiple. Murky books = buyer discount of 15-30%.

Diversify revenue + build recurring

Medium priority

Both customer concentration AND revenue mix shift the multiple. Even adding subscription tiers to a transactional business helps.

What is How to Value a Small Business?

SDE (Seller's Discretionary Earnings) = Net Profit + Owner Salary + Add-backs. This normalizes earnings to show a buyer what they could earn if they ran the business full-time.

Business value = SDE × Multiple. The multiple depends on industry, growth, recurring revenue, customer concentration, and business risk.

Frequently Asked Questions

Sources & References

This tool is for educational purposes only and does not constitute financial, tax, or investment advice. Consult a qualified financial professional for advice specific to your situation.

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