What Is My Business Worth?

Quick answer

Most small businesses are worth a multiple of their yearly earnings. A quick way to estimate value is to take your annual cash flow (usually measured as SDE or EBITDA) and multiply it by a number that reflects your industry and risk, commonly 2 to 4 times for small businesses. The most reliable way to get a real number is a data-driven valuation that compares your business to recent sales.

Key takeaways

• Business value is usually earnings times a multiple, not a percentage of revenue.
• The multiple depends on your industry, size, and how risky the business looks to a buyer.
• You can get a free, data-driven estimate in about seven minutes.
• A certified valuation gives you a defensible number for selling, financing, or planning.

The simple way to estimate your business value

At its core, the math is straightforward: yearly earnings multiplied by a multiple. If your business produces $400,000 in annual cash flow and similar businesses sell for about 3 times earnings, a rough estimate is $1,200,000. The two inputs that matter are which earnings figure you use and which multiple applies, and both deserve a closer look. For a full walkthrough of the methods behind this, see how to value a small business.

What counts as earnings?

Buyers do not value your business on revenue. They value it on profit, specifically the true cash the business generates. For smaller, owner-operated businesses that figure is usually SDE (Seller’s Discretionary Earnings), which adds the owner’s salary and benefits back to net profit. For larger businesses that already pay a management team, the figure is EBITDA. Using the right earnings number is the difference between a realistic estimate and a misleading one.

What raises or lowers your business worth

Once you know your earnings, the multiple is set by how much risk a buyer sees. The same drivers move your number up or down:

• How dependent the business is on you. If it runs without you, it is worth more.
• Margin health. A cash-flow margin around 20% or higher signals a financeable, sellable business.
• Revenue quality. Recurring, predictable income and a broad customer base earn a higher multiple.
• Clean books and documented systems. They make diligence faster and reassure buyers.
• Growth and industry. Growing businesses in in-demand sectors command premiums.

Get your number in about seven minutes

The fastest way to answer the question is a free business valuation estimate. You answer a few questions about your business and receive a data-driven value range in roughly seven minutes, with no credit card required and a free PDF report when you sign up. It pulls from real industry data, so it is a genuine starting point rather than a wild guess.

When you need a certified valuation

An estimate is great for orientation. For anything with real stakes, a sale, an SBA loan, a partner buyout, estate planning, or a legal matter, you need a certified valuation. Bridge delivers one for a flat $1,999 in 3 to 5 business days, prepared by ABV and AICPA certified experts, grounded in comparable sales, and accepted by banks, buyers, and courts. It also comes with a consultation so you understand exactly how the number was built.

If the number is lower than you hoped, that is valuable too. It tells you where to focus. Bridge can help you grow your value before you go to market, or guide you through the full process when you are ready to sell.

Why your number and a buyer’s number differ

Most owners carry a figure in their head long before they ask anyone. It usually comes from what a competitor reportedly sold for, a rule of thumb heard at a conference, or the amount needed to fund retirement. None of those are valuations, and all three tend to sit above what a buyer will pay.

A buyer is not pricing the business you built. They are pricing the earnings they expect to receive after you leave, adjusted for the risk of those earnings not showing up. Everything that makes the business feel valuable to you, the years invested, the relationships, the reputation, only counts to the extent it survives your departure.

That gap is not a reason to be discouraged. It is useful information, because almost every item that creates the gap is something you can work on while you still own the business.

What a buyer checks before agreeing to your number

Once a price is on the table, the number stops being a calculation and starts being a claim you have to support. Diligence is where estimates either hold or come apart.

• Three years of financial statements that reconcile to your tax returns
• Evidence that add-backs are real and non-recurring
• Customer concentration, and what happens if the largest account leaves
• Whether key contracts, leases, and licenses transfer to a new owner
• How much of daily operations depends on you personally

Very few businesses clear all of these without a single question. The ones that hold their price are the ones where the answers are already documented, rather than assembled during a two-week scramble while a buyer waits.

If any item on that list would be difficult to answer today, it is worth treating as a project rather than a problem. Customer concentration in particular tends to take a year or more to improve, which is why finding out early matters.

What to do once you have a number

An estimate is most useful as a decision-making tool, not as a price tag. Three questions are usually worth asking of it.

First, does it get you where you need to go? Compare the figure, after tax and after any debt is repaid, against what you actually need from the sale. If there is a shortfall, you have found out while there is still time to close it.

Second, which single factor is holding it back the most? Owner dependence, thin margins, and concentrated revenue are the usual answers, and improving one of them typically moves the number more than improving all the small things together.

Third, how does it change over the next two to three years under your current plan? A business worth a certain amount today and clearly growing is a different proposition to one holding steady, and buyers price that difference.

Owners who revisit the number annually rather than only when they are ready to sell tend to end up with more options, because they are choosing when to go to market instead of reacting to a deadline.

Selling is not the only reason to know

Plenty of owners need a defensible value with no intention of going to market. A partner buyout, a divorce, an estate plan, a bank facility, or a buy-sell agreement between shareholders all turn on a number that someone else has to accept.

In those situations the standard is higher than a working estimate. A lender, an attorney, or a tax authority will want to see the method, the comparable transactions, and the reasoning behind the multiple, not just the result. A certified valuation exists for exactly this purpose.

It is also worth knowing your number simply as a matter of planning. For most owners the business is the largest asset they hold, and it is the only one they cannot check the value of on a screen.

Frequently asked questions

How do I find out what my business is worth?

Estimate it as annual earnings (SDE or EBITDA) times an industry multiple, or get an exact range with a free valuation estimate in about seven minutes.

Is business value based on revenue or profit?

Profit, not revenue. Buyers value the true cash a business generates, measured as SDE for smaller businesses or EBITDA for larger ones, then apply a multiple.

What multiple should I use for my business?

Small businesses commonly sell for about 2 to 4 times SDE, but the exact multiple depends on your industry, size, and risk. See valuation multiples by industry for ranges.

Is the free estimate accurate enough to sell my business?

The free estimate is a strong starting point. For setting an asking price, securing financing, or any legal use, order a certified valuation, which is built to be accepted by banks, buyers, and courts.

How long does a certified valuation take?

Most certified valuations are delivered within 3 to 5 business days after Bridge receives your documents.

See what your business is worth today

Get a free, data-driven estimate in minutes. Start your valuation, or talk to an advisor about a certified report.

About Bridge. Bridge helps small business owners value, scale, and exit with confidence. Certified valuations are prepared by ABV and AICPA credentialed experts, delivered for a flat $1,999 in 3 to 5 business days, and are SBA-compliant. The team has served 300+ businesses and supported more than $1B in M&A transactions. Learn more at bridge.financial.

This article is educational and not financial, legal, or tax advice. For a number specific to your business, request a certified valuation.