Small Business Value Calculator
A small business valuation calculator gives you a defensible asking price (or offer price) for a Main Street business before you pay an appraiser. For businesses under about $5 million in revenue, buyers and brokers price deals as a multiple of Seller’s Discretionary Earnings (SDE): net income plus the owner’s salary, depreciation, and personal add-backs. This tool computes your SDE step by step, applies an industry multiple, and cross-checks the result against a revenue multiple, so you get a value range instead of a single fragile number.
The method matches how real deals get done: SCORE’s small-business sale guide notes that valuation is typically a multiple of EBITDA or earnings, with higher multiples for more attractive industries. If you are modeling what that equity value means for your team, run the numbers through an equity compensation plan; if you are splitting ownership among founders first, the commission-to-equity ratio and founder-split logic matters; and the whole exercise starts from honest profit figures, which is where an agency profit style baseline (or your own P&L) comes in. Keep your cost side honest with a business cost review, since inflated add-backs are the fastest way to blow up a valuation in diligence.
SDE multiple, revenue multiple, and a defensible value range
A planning estimate, not a certified appraisal. For SBA loans over $350,000 or any dispute, hire a qualified business appraiser.
Quick Answer
Key takeaways
- SDE = net income + owner salary and benefits + depreciation and amortization + documented add-backs. It answers: what does one working owner actually take home?
- Value = SDE x industry multiple. Service businesses typically trade at 2.0–3.5x, retail at 1.5–3.0x, tech at 3.0–6.0x.
- Always run at least two methods (SDE multiple + revenue multiple). A wide spread between them is a warning about your margins.
- This is a planning estimate. Deals over $350,000 financed with SBA loans require a certified appraisal anyway.
- Quick Answer
- What "value" actually means for a small business
- The SDE method, step by step
- Worked example: a $300,000 SDE service business
- SDE vs EBITDA vs revenue multiples: which to trust
- What competing valuation calculators miss
- When you need a certified appraiser, not a calculator
- Frequently Asked Questions
- Add This Calculator to Your Website
- References
What "value" actually means for a small business
Value is what a willing buyer pays a willing seller when neither is forced to act. That is the SBA's fair-market-value standard, and in practice for Main Street deals it comes down to earnings: a buyer is purchasing the cash the business can throw off after they step into your shoes. That is why brokers start from SDE rather than revenue. Two businesses with identical $800,000 revenues can be worth wildly different amounts if one keeps 35 cents of every dollar and the other keeps 8.
The SDE method, step by step
SDE rebuilds your profit the way a buyer sees it: start with reported net income, then add back everything that is really owner compensation or a paper charge. Each add-back needs a receipt or payroll record, because buyers and lenders verify every line in diligence.
Worked example: a $300,000 SDE service business
Take a service business doing $800,000 in annual revenue with $120,000 in net income. The owner takes $150,000 in salary and benefits, the books show $20,000 in depreciation, and there are $10,000 in documented personal expenses run through the company. The tool computes:
| Line | Amount |
|---|---|
| Net income | $120,000 |
| + Owner salary and benefits | $150,000 |
| + Depreciation and amortization | $20,000 |
| + Other add-backs | $10,000 |
| SDE | $300,000 |
| x Service multiple (3.0x) | $900,000 |
| Revenue cross-check (0.6x) | $480,000 |
| Midpoint | $690,000 |
Those are the tool's exact outputs for those inputs. The $420,000 gap between the two methods is not a bug; it is information. This business keeps 37.5 cents of every revenue dollar as SDE, which is rich for services, so the earnings method runs hot while the revenue method anchors it. A buyer would open negotiations near the revenue number and move toward the SDE number only if the earnings quality survives diligence.
SDE vs EBITDA vs revenue multiples: which to trust
Use SDE for owner-operated businesses under about $5 million in revenue, where one person's pay is a big slice of profit. Use EBITDA (which does not add back a market-rate manager salary) for larger businesses with professional management, where multiples run 3–6x. Use revenue multiples only as a sanity check, or for high-growth businesses with temporarily depressed earnings. The calculator shows SDE and revenue side by side because the spread between them tells you whether your margins look normal for your industry.
| Method | Formula | Best for | Typical multiple |
|---|---|---|---|
| SDE multiple | (Net + owner pay + D and A + add-backs) x multiple | Owner-operated, under ~$5M revenue | 2.0–4.5x |
| EBITDA multiple | (SDE − market manager salary) x multiple | Managed businesses, $2M+ revenue | 3.0–6.0x |
| Revenue multiple | Revenue x multiple | Cross-check; high-growth firms | 0.4–1.5x |
| Asset method | Fair value of assets − liabilities | Floor value; asset-heavy firms | n/a |
What competing valuation calculators miss
Most free valuation tools ask for revenue and a multiple and print a number. That single-input math skips the entire SDE buildup, which is where real valuations are won or lost: undocumented add-backs get thrown out in diligence, and the "value" collapses. Other tools apply one generic multiple to every industry, which is how a retail shop ends up priced like a SaaS company. And almost none of them show the spread between methods, even though a 40-percent-plus spread is the market telling you your margins do not match your multiple.
This calculator forces the SDE buildup line by line, applies industry-specific multiples, and flags a wide method spread with an explicit verdict so you investigate before you negotiate. It also reminds you where the estimate stops: it is not enterprise value (debt and cash adjustments still apply), and it is not a certified appraisal.
When you need a certified appraiser, not a calculator
Use this tool to set expectations and test asking prices. Hire a qualified appraiser when the number has to hold up under scrutiny: SBA-financed acquisitions (required for larger loans), partnership buyouts, divorces, estate settlements, and any deal where goodwill exceeds half the price. A formal appraisal runs the income, market, and asset approaches with documented reasoning, which is what lenders and courts accept.
Frequently Asked Questions
Seller's Discretionary Earnings: net income plus the owner's total compensation, depreciation and amortization, interest, and documented personal or one-time add-backs. It measures the total cash benefit one working owner gets from the business, and it is the earnings figure most Main Street deals are priced on.
Most Main Street businesses sell for 2 to 4 times SDE. Service businesses typically land at 2.0–3.5x, retail at 1.5–3.0x, and tech or SaaS at 3.0–6.0x. Recurring revenue, growth, low owner dependence, and clean books push the multiple up; customer concentration and declining earnings push it down.
Use SDE for owner-operated businesses under about $5 million in revenue, where the owner's pay is a large part of profit. Use EBITDA for larger businesses with hired management, since EBITDA does not add back a manager's salary. The same business will show a higher EBITDA multiple than SDE multiple for the same price, so never compare multiples across the two measures.
Owner compensation and benefits, personal expenses run through the business (vehicle, travel, phone, family on payroll), non-recurring costs (a lawsuit, a one-time repair), and non-cash charges like depreciation. Each needs documentation. Buyers and lenders routinely reject add-backs that are really ongoing business costs relabeled.
Because your margins differ from the industry norm the multiples assume. If the SDE method gives a much higher value, your margins are richer than typical, and a buyer will discount for the risk that they revert. If the revenue method is higher, margins are thin, and the fix is operational before the sale, not a higher multiple.
Neither exactly; it gives an indicated operating value from earnings multiples. Enterprise value adjusts for the capital structure, and equity value (what the owner pockets) subtracts debt and adds cash. For most debt-light Main Street businesses the difference is small, but confirm it before signing anything.
As a starting point, yes, but SBA lenders require a certified appraisal for larger acquisitions, and they cap what they will finance using their own rules: typically at least 10 percent buyer equity injection, goodwill scrutiny, and a minimum 1.25x debt-service coverage ratio. Your valuation must survive those tests, not just look right on screen.
References
- SCORE. Selling a Small Business. Accessed October 19, 2026.
- 45 Day Exit. Real Examples: SDE vs. EBITDA in Business Valuation. Accessed October 19, 2026.
- eFinancialModels. Small Business Valuation: What Is Your Business Worth? Accessed October 19, 2026.
- eBit Community. How to Value a Small Business: 5 Proven Methods. Accessed October 19, 2026.
- Buy Scale Sell. Business Valuation 2026: A Buyer's Guide to Paying the Right Price. Accessed October 19, 2026.
- DealForge HQ. How to Value a Small Business (Step-by-Step Formulas and Examples). Accessed October 19, 2026.