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Free Small Business Valuation Calculator

Small Business Valuation Calculator

Estimate what your small business may be worth using the SDE × multiple approach. For many owner-operated businesses under roughly $3M in revenue, SDE is commonly used as the earnings measure. Enter your earnings and owner add-backs to calculate SDE, set a multiple, and see an estimated business value and range. Adjust the inputs and watch your SDE and estimated value update live. No signup, no email.

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Estimate Your Small Business Value

Enter your earnings and owner add-backs to calculate SDE, then set a multiple to see the estimated business value and range. Results update live as you adjust the inputs.

Earnings

Start with your bottom line, then add back what a new owner wouldn't inherit.

Annual revenue

Net profit (pre-tax)

Add-backs

Owner-specific and one-time costs a buyer adds back to find true earning power (SDE).

Owner's compensation

Owner perks (vehicle, insurance)

Depreciation & amortization

Interest

One-time / non-recurring expenses (legal, repairs, moves)

Valuation multiple

What buyers pay per $1 of SDE. Recurring contracts and low owner-dependence push it up.

Multiple (× SDE)3.0×

Estimated business value

SDE

Multiple

3.0×

SDE margin

How SDE is built

Net profit

Total add-backs

SDE

Value range

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Estimates use your inputs — adjust to match your real costs. Benchmarks are starting points, not advice.

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SDE First, Then the Multiple

Business value comes from your Seller’s Discretionary Earnings (SDE) and the multiple a buyer applies. The process is straightforward: normalize the business’s earnings to SDE, then apply a multiple based on how predictable and transferable those earnings are.

SDE starts with net profit and adds back owner compensation, eligible owner perks, interest, depreciation and amortization, and legitimate one-time costs. The multiple reflects earnings quality, including recurring revenue, lower owner dependence, and clean financial records.

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How To Value Small Business

Use the calculator above, or run it yourself. For an owner-operated business under about $3M in revenue, buyers value it on SDE, your true owner benefit, multiplied by an appropriate valuation multiple.

1. Start with net profit. Use the pre-tax net profit from a clean P&L.
2. Add back eligible owner compensation. Include owner salary and other qualifying compensation that may be added back under the valuation methodology.
3. Add back eligible owner perks. Include qualifying personal expenses such as vehicle, insurance, or travel run through the business.
4. Add back interest, D&A, and one-time costs. Include financing costs, depreciation and amortization, and legitimate non-recurring expenses.
5. Calculate your SDE. These adjusted earnings represent the owner's economic benefit and provide the basis for the valuation.
6. Apply a small business multiple. Choose a multiple based on recurring revenue, owner dependence, financial quality, customer concentration, and the transferability of the business.

What Goes into the Valuation

A business valuation for an owner-operated small business typically includes:

Net profit

Your pre-tax bottom line and the starting point for calculating SDE.

Owner's compensation

Eligible owner compensation that may be added back when calculating SDE, depending on the valuation methodology.

Owner perks

Eligible personal expenses such as a vehicle, insurance, or travel run through the business.

Interest, depreciation & amortization

Applicable financing costs and non-cash accounting expenses that may be added back when calculating SDE.

One-time expenses

Non-recurring costs that a new owner is not expected to repeat.

The multiple

What buyers pay for each $1 of SDE, influenced by recurring revenue, owner dependence, customer concentration, financial records, and the transferability of the business.

Frequently Asked Questions

SDE, or Seller's Discretionary Earnings, is your net profit plus expenses and benefits a new owner would not inherit, such as owner compensation, eligible personal expenses, interest, depreciation, amortization, and one-time costs. Buyers use SDE because it shows the economic benefit available to a new owner-operator. Net profit alone does not provide the same comparison because it includes the current owner's compensation and other expenses that may change after a sale.

For many owner-operated businesses under roughly $3M in revenue, SDE is commonly used because the buyer may be taking over the owner's operating role. At larger businesses with an established management team, buyers may use EBITDA because those management costs continue after the sale. The crossover is not rigid, and the appropriate earnings measure depends on the business and buyer. This calculator uses the SDE method.

Revenue alone does not determine the multiple. The quality and transferability of the earnings matter more. Recurring revenue, lower owner dependence, diversified customers, clean financial records, and strong employee retention can support a higher multiple. Heavy owner reliance, concentrated customers, inconsistent revenue, or poorly documented financials can push the multiple lower.

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