Business Valuation Calculator
Enter a business’s SDE and industry to get its rule-of-thumb value, and check any asking price against the real multiple band. Free, instant, no signup.
Don’t know the SDE? Calculate it from the P&L first.
Midpoint $300,000 · General Local Service Business typically trades at 2–3× SDE.
How small businesses are actually valued
Owner-operated businesses sell on a multiple of Seller’s Discretionary Earnings (SDE), the total cash the owner takes out of the business each year, counting net profit, owner salary, perks, and one-time costs. The formula is short: value = SDE × industry multiple. Everything a broker, buyer, or lender argues about lives in those two numbers.
The multiple is set by the market for that category of business, how risky, how owner-dependent, and how transferable its earnings are. A laundromat’s income survives an ownership change almost untouched, so it trades at 3-4×. A full-service restaurant’s income depends on thin margins and the person running the kitchen, so it trades at 1.5-2.5×.
SDE valuation multiples by industry
Rule-of-thumb bands for 30 common small-business categories, the same table our paid Deal Scan report checks asking prices against.
| Business type | Typical SDE multiple |
|---|---|
| Laundromat / Coin Laundry | 3× - 4× |
| Car Wash | 2.5× - 3.5× |
| HVAC | 2.5× - 3.5× |
| Plumbing | 2.5× - 3.5× |
| Electrical Contracting | 2.5× - 3.5× |
| Pest Control | 3× - 4× |
| Landscaping / Lawn Care | 2× - 3× |
| Commercial Cleaning / Janitorial | 2.5× - 3.5× |
| Residential Cleaning / Maid Service | 2× - 3× |
| Quick-Service / Fast Food | 2× - 3× |
| Bar / Nightclub | 2× - 3× |
| Coffee Shop / Cafe | 1.5× - 2.5× |
| Restaurant (Full-Service) | 1.5× - 2.5× |
| Ecommerce / DTC Brand | 2.5× - 4× |
| SaaS / Small Software | 3× - 5× |
| Gym / Fitness Studio | 2.5× - 3.5× |
| Salon / Spa / Barbershop | 2× - 3× |
| Daycare / Childcare Center | 2.5× - 3.5× |
| Auto Repair Shop | 2× - 3× |
| Towing Company | 2.5× - 3.5× |
| Dry Cleaner | 2× - 3× |
| Vending Machine Route | 2× - 3× |
| Digital Marketing / Creative Agency | 2× - 3.5× |
| Bookkeeping / Accounting Practice | 2.5× - 3.5× |
| Insurance Agency (Book of Business) | 2.5× - 3.5× |
| Property Management Company | 2.5× - 3.5× |
| Moving Company | 2× - 3× |
| Pet Grooming / Boarding | 2× - 3× |
| Retail Store (General) | 2× - 3× |
| General Local Service Business | 2× - 3× |
Bands are rules of thumb for typical owner-operated deals, not an appraisal. Size, growth, books quality, and owner-dependence move a specific business inside, or outside, its band.
The multiple is rarely the problem. The SDE is.
Buyers argue about whether a deal should be 2.5× or 3×, but the bigger risk hides in the number being multiplied. A seller who inflates SDE by $50,000 with soft add-backs, a “one-time” repair that happens every year, a family salary added back without proof, moves a 3× valuation by $150,000. Before trusting any valuation:
- Reconcile SDE against 3 years of tax returns, not the broker’s one-page summary.
- Demand documentation for every add-back, payroll records, receipts, invoices.
- Check the trend, not one year. A multiple applies to sustainable earnings; a single spike year isn’t that.
- Subtract a manager’s salary if you won’t run the business day-to-day yourself.
Frequently asked questions
How do you calculate what a small business is worth?
The standard method for owner-operated businesses is an SDE multiple: take the business's Seller's Discretionary Earnings (net profit plus owner salary, perks, one-time costs, and non-cash charges) and multiply it by a rule-of-thumb multiple for its industry. A landscaping company with $150,000 SDE at a 2-3x band is worth roughly $300,000-$450,000. Larger businesses with management teams in place are valued on EBITDA multiples instead.
What is a typical valuation multiple for a small business?
Most owner-operated small businesses sell for 2-3x SDE. Recurring-revenue, low-labor businesses like laundromats and pest control command 3-4x. SaaS runs 3-5x. Restaurants and cafes sit lowest at 1.5-2.5x because of thin margins and key-person risk. Size matters too: businesses with SDE over $500k, a management team, and diversified customers trade at the top of their band or above it.
Should I value a business on revenue or profit?
Profit (SDE), almost always. Revenue multiples are misleading for small businesses because two companies with identical revenue can have wildly different owner earnings, a $1M-revenue restaurant might net $80k while a $1M-revenue bookkeeping firm nets $400k. Revenue-based valuations only make sense in categories where margins are highly standardized, or for pre-profit startups where there's no earnings history to multiply.
What makes a business worth a higher multiple?
Anything that reduces the buyer's risk of the earnings disappearing after closing: recurring or contracted revenue, a manager or team that runs day-to-day operations without the owner, diversified customers (no single customer over 10-15% of revenue), clean books that match tax returns, several years of stable or growing SDE, and transferable supplier or franchise agreements. The inverse, owner-dependence, customer concentration, declining revenue, pushes a deal to the bottom of the band or below it.
Is this calculator an official business appraisal?
No. This gives you the rule-of-thumb range a business broker would quote, the right starting point for screening a listing or setting expectations before a sale. A certified appraisal (for an SBA loan, litigation, or a partner buyout) involves a credentialed appraiser analyzing the specific business's financials, assets, and market, and typically costs $1,500-$5,000.
How do I check if a listing's asking price is fair?
Divide the asking price by the trailing-twelve-month SDE and compare the result to the industry band, this calculator does that automatically when you enter an asking price. If it's above the band, the seller is pricing in a premium and should be able to point to concrete reasons (contracts, growth, a manager in place). Then verify the SDE itself against 3 years of tax returns, not just the broker's summary, an inflated SDE is a bigger risk than an inflated multiple.
Related free tools
- Seller Financing Calculator, structure the seller note on this deal and check the business can service it.
- SDE Calculator, build the SDE number itself from net profit and add-backs.
- SBA Loan Calculator, check whether the earnings can service an acquisition loan at this price.
- Startup Valuation Calculator, for pre-profit startups valued on revenue multiples or scorecards.
The multiple checks the price. It says nothing about the market around the business, demand trend, competitor density, local economics. That’s what a Due Diligence Scan reads before you commit.
Get a Due Diligence Scan →Idea-stage instead? Get a free signal scan