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.
NEXT STEP
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