Business Valuation Calculator — Rule-of-Thumb Estimate
Get a rough rule-of-thumb business value from earnings (SDE or EBITDA) times an industry multiple, with a revenue cross-check. An estimate, not an appraisal.
About Business Valuation Calculator
A business valuation calculator is a tool that produces a rough, rule-of-thumb estimate of what a small business might be worth, using earnings multiples rather than a formal appraisal. The main method multiplies annual earnings — usually seller’s discretionary earnings (SDE) or EBITDA — by an earnings multiple; small businesses commonly trade around 2 to 4 times SDE. As a cross-check, it also applies a revenue multiple to annual sales. These are orientation figures only: they cannot capture the factors that truly move value, such as industry, growth rate, how dependent the business is on its owner, customer concentration, and risk. Treat the output as a rough starting point, and get a professional valuation before you buy or sell.
Use cases
- Get a ballpark before a serious process. Long before hiring an appraiser or listing a business for sale, owners and buyers want a rough sense of scale. Multiplying earnings by a typical multiple gives an order-of-magnitude figure — is this a $200,000 business or a $2 million one — so you can decide whether a deal is even worth pursuing. It is a first glance, never the basis for an actual offer.
- Understand what drives a multiple. The calculator makes the multiple visible, which is the most instructive part. Nudging it from 2× to 4× shows how much value hinges on factors like growth, recurring revenue, and low owner dependence. That intuition — that a stable, transferable business earns a higher multiple than a fragile owner-dependent one — is often more useful than the dollar figure itself.
- Cross-check earnings against revenue. A single method can mislead, so the tool pairs the earnings multiple with a revenue-multiple cross-check. When the two land far apart, that gap is a prompt to look closer — perhaps margins are unusually thin or unusually fat, or one input is off. Seeing both side by side is a sanity check, not a precise reconciliation of the two numbers.
- Prepare questions for a professional. Bringing a rough estimate to an accountant, a broker, or an appraiser helps you have a sharper conversation. You can ask why their figure differs from the rule-of-thumb number, what multiple your industry actually commands, and which risks are pulling value down. The tool is there to inform that discussion, not to replace the expert who will do the real work.
- Set expectations for a partnership or exit. Whether you are buying out a partner, planning succession, or thinking years ahead about an exit, a ballpark valuation helps set realistic expectations for everyone involved. It can temper an inflated hope or reveal that value is lower than assumed, giving a calmer, numbers-based starting point — as long as everyone understands it is an estimate, not a settled price.
How it works
- Enter annual earnings. Provide seller’s discretionary earnings (SDE) or EBITDA — the yearly profit the business generates for its owner.
- Choose an earnings multiple. Pick a multiple for your industry and situation; small businesses often fall around 2 to 4 times SDE.
- Enter annual revenue. Add yearly sales so the tool can run a revenue-multiple cross-check alongside the earnings method.
- Set the revenue multiple. Choose a revenue multiple appropriate to your sector for the secondary estimate.
- Read both estimates. The calculator shows earnings × multiple as the primary value and revenue × multiple as a cross-check, both clearly labelled as estimates.
Examples
Input: SDE $120,000, multiple 3×, revenue $500,000, revenue multiple 0.6×
Output: Earnings value $360,000; revenue cross-check $300,000
The two methods bracket a rough range, not a single price.
Input: EBITDA $250,000, multiple 4×, revenue $1,200,000, revenue multiple 0.8×
Output: Earnings value $1,000,000; cross-check $960,000
When the methods roughly agree, confidence in the ballpark improves — but it is still an estimate.
Input: SDE $90,000, multiple 2×, revenue $600,000, revenue multiple 0.5×
Output: Earnings value $180,000; cross-check $300,000
A wide gap between the methods is a signal to dig into the numbers with a professional.
Frequently asked questions
What is SDE and how is it different from EBITDA?
Seller’s discretionary earnings (SDE) is the yearly benefit to a single owner-operator: net profit with the owner’s salary, one-off costs, and non-cash items added back. EBITDA — earnings before interest, taxes, depreciation, and amortization — does not add back an owner’s salary, so it is used more for larger businesses. Small firms are usually valued on SDE.
What multiple should I use?
It varies widely by industry, size, growth, and risk, which is why no calculator can pick it for you. Small businesses often sell for roughly 2 to 4 times SDE, but the right figure comes from recent sales of comparable businesses in your specific field. Treat the default as a placeholder to adjust.
Why include a revenue cross-check?
Earnings can be distorted by an unusual year or by how costs are recorded, so a second method based on revenue gives a rough reality check. If the earnings value and the revenue value are far apart, that gap is worth investigating before you trust either number.
Is this a real business valuation?
No, and this matters: it is a rough rule-of-thumb estimate for orientation only. A formal valuation examines financials, assets, contracts, market conditions, and risk in depth. Do not use this output as a price or as evidence in a negotiation, a dispute, or a financing application.
What factors does this NOT account for?
Many of the things that most affect value: industry and market conditions, growth trajectory, how dependent the business is on its current owner, customer concentration, the quality of earnings, assets and debt, and overall risk. A simple multiple cannot see any of these.
Should I set a sale price from this?
No. Setting a real asking or offer price requires a professional valuation and, usually, a broker or accountant. This estimate is only for getting an early sense of scale so you know whether a fuller process is worth starting.
Is my data uploaded anywhere?
No. Every calculation runs in your browser, and nothing you enter is transmitted or stored.
Pro tips
- Normalize earnings first — add back one-off costs and an owner’s above-market salary to reach a true SDE.
- Research the multiple that businesses in your specific industry actually sell for, not a generic average.
- Treat the earnings and revenue estimates as a range rather than a single precise number.
- Remember that buyers discount for owner dependence and customer concentration, which a rule of thumb cannot.
- Get a professional appraisal before you actually buy, sell, or set a price.
Reviewed by Ahsan Mahmood · Last updated 2026-07-08 · Part of ZTools.
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