Owner’s guide
How to Value a Small Business (Owner’s Guide)
Owners usually want one number: “What’s it worth?” Buyers almost never work that way. They think in a range, stress-test the earnings, and discount for risk. A planning estimate is homework — not a certified appraisal and not a guaranteed sale price.
Last updated: September 22, 2026
Pick the earnings base
If you still run day-to-day sales and ops, buyers usually care about Seller’s Discretionary Earnings (SDE): the total annual benefit to one full-time owner-operator. If a management team can run the company without you, EBITDA becomes more relevant. Using the wrong base misprices the business.
How SDE is typically built
Start from profit, then add back one owner’s compensation and perks, interest, taxes, depreciation/amortization, and documented one-time or personal expenses that a new owner would not keep. Keep add-backs honest — buyers and lenders will ask for proof.
Apply a market multiple
Main Street owner-operated businesses often trade in a rough band around 2×–4× SDE, with industry, size, growth, and risk moving the multiple. Recurring revenue, clean books, and transferable operations support the higher end. Owner dependence, customer concentration, and thin documentation pull it down.
Ready for a planning range built from multiple methods?
Free Preview takes about 15 minutes — no credit card.
Start your free valuationCross-check more than one method
A single rule of thumb is fragile. ValuRight blends several methods — including SDE and EBITDA multiples, revenue sanity checks, simplified DCF, asset-based floor, comparable-sales context, and cap rate / NOI when the business is income-property oriented (for example RV parks and campgrounds) — into a planning range with confidence notes. Own a park? Here's how to value an RV park or campground, step by step.
What to do with the range
Use it to decide whether you are ready to talk to a CPA or broker, which risks to fix first, and whether your retirement number and the business’s planning range are even in the same zip code. Then review assumptions with a qualified advisor before you set an asking price.
Software-generated planning estimate only. Not a certified appraisal, tax advice, legal advice, investment advice, or guaranteed sale price.
FAQ
Is there one number for what my business is worth?
Usually no. Buyers think in a planning range built from earnings and risk (transferability, concentration, documentation), not a single multiple on a napkin. Use the range for homework before you set an asking price with advisors. It is not a certified appraisal.
Should I use SDE or EBITDA?
If you still run day-to-day sales and ops, buyers usually start with Seller’s Discretionary Earnings (SDE) — the total annual benefit to one full-time owner-operator. More professionally managed companies often discuss EBITDA. The wrong earnings base misprices every later conversation. See What is SDE?.
What does the “2×–4× SDE” band on this page mean?
It is rough Main Street planning shorthand already stated on this page — not a promise, not an industry comps table, and not your sale price. Industry, size, growth, and transferability move where a buyer lands inside (or outside) that band. Cross-check with Methodology and Owner dependence.
Why check more than one valuation method?
A single rule of thumb is fragile. ValuRight blends several methods appropriate to the business into a headline planning range with confidence notes. See How ValuRight values a small business or start a Free Preview.
What should I do with a planning range?
Compare it to your retirement or walk-away number, pick which risks to fix first (especially owner dependence), then talk to a CPA or broker before you publish an asking price. The range is homework — not a listing price by itself.
Does Free Preview replace an appraisal?
No. Free Preview is a software-generated planning estimate for owners getting oriented. Use a formal appraisal when lenders, courts, tax, or a purchase agreement require one.