Small Business Valuation Calculator
What is your business worth? This free small business valuation calculator estimates a broker-style asking price two ways: the SDE (Seller's Discretionary Earnings) multiple method — the standard for valuing small owner-operated businesses — and a revenue multiple method for a quick sanity check.
Enter your numbers
SDE add-back worksheet
SDE = net profit + these add-backs. Enter your figures, then tap the button to load the total into the SDE field above.
Your results
| SDE-based value | $500,000 |
|---|---|
| Revenue-based value | $800,000 |
| Inventory / asset add-on | $0 |
Rough estimate, not an appraisal. This is a broker-style estimate using standard multiples. A formal valuation also weighs tax returns, customer concentration, debt, and market comparables.
How to use this calculator
Start with your SDE — Seller's Discretionary Earnings. If you already know it, type it in. If not, use the add-back worksheet: enter your net profit, add back the owner's salary and perks, depreciation, interest, and any one-time expenses, then tap "Use this SDE" to load the total into the main SDE field.
Next, pick an SDE multiple with the slider (the default 2.5× is a middle-of-the-road starting point) and enter your annual revenue plus a revenue multiple for the secondary check. If your deal is asset-inclusive, add your inventory at cost in the add-on field. Results update instantly as you type.
How it works
The primary method is the SDE multiple method: value = SDE × multiple. SDE is the total economic benefit a single owner-operator takes from the business — net profit with the owner's compensation and non-cash or one-time costs added back. Business brokers typically apply a 2.0× to 4.0× multiple to SDE for small businesses, with recurring-revenue, low-owner-dependence businesses commanding more.
The secondary check is the revenue method: value = annual revenue × revenue multiple, typically 0.5× to 1.5× for small service businesses. Because revenue multiples ignore profitability, brokers anchor on SDE; the revenue number is there to flag when your margins are unusual. The low–high range is simply your SDE at a 2.0× and a 4.0× multiple — the span most small-business asking prices fall inside.
Everything here is a rough broker-style estimate, not a formal appraisal. Real valuations adjust for tax-return-verified earnings, customer concentration, debt, working capital, industry, and comparable sales. Use this number to start a conversation — not to sign a deal.
Frequently asked questions
What is SDE in a small business valuation?
SDE stands for Seller's Discretionary Earnings. It is the business's net profit plus add-backs: the owner's salary, perks, depreciation, interest, and one-time expenses. It represents the total financial benefit a single owner-operator gets from the business, and it is the starting point for the most common small business valuation method.
What multiple should I use to value my small business?
For most small service and retail businesses, brokers typically apply an SDE multiple of 2.0 to 4.0 times. Strong businesses with recurring revenue, clean books, and little owner dependence trend toward 3.0x to 4.0x or higher, while riskier or declining businesses trend toward the lower end. This calculator defaults to 2.5x as a middle-ground starting point.
Is this calculator a formal business appraisal?
No. This tool gives a rough broker-style estimate using standard multiple methods, which is useful for a first sanity check or an asking-price conversation. A formal appraisal or broker valuation opinion considers tax returns, customer concentration, assets, liabilities, and market comparables. Do not rely on this estimate for legal, tax, or sale contracts.
Should I add inventory and assets to the SDE-based price?
It depends on how the sale is structured. In an asset sale, buyers commonly pay the SDE-based price plus the value of inventory at cost, and sometimes equipment or real estate on top. Enter the inventory or asset value in the add-on field if your deal is asset-inclusive; leave it at zero for a stock sale where assets are already inside the business.
Why is my revenue-based value so different from my SDE-based value?
Revenue multiples ignore profitability, so a low-margin business can look expensive on revenue and cheap on SDE. Brokers usually anchor on SDE for small businesses because it reflects actual earnings. If the two methods disagree widely, look for unusual add-backs or a very thin or very fat profit margin.