What Is My Business Actually Worth?

It's the first question almost every owner asks, and the one that's hardest to get a straight answer to. You've spent years — often decades — building something real. But when you sit down to ask what it's actually worth, you hit a wall of vague answers, expensive appraisals, and brokers who want a retainer before they'll tell you anything.

So let's cut through it. Here is how business value is actually calculated, in plain English, and what you can do to move the number.

Your business is worth what it earns, times a multiple

Almost every small-business valuation comes down to one simple idea: a buyer is paying for the profit the business will keep producing after they take over. So value starts with earnings, and then applies a multiple — a number that reflects how reliable and transferable those earnings are.

Value ≈ normalized earnings × a multiple. Everything else is a detail that pushes those two numbers up or down.

For most owner-operated businesses, “earnings” means SDE (Seller's Discretionary Earnings) or EBITDA— not the profit figure at the bottom of your tax return. Those numbers add back the owner's salary, one-off expenses, and a few other adjustments to show what the business really generates. We break those down in EBITDA, SDE, and Multiples — Explained.

Why you get a range, not a single number

No honest valuation gives you one figure. The right answer is always a range, because the final price depends on who the buyer is, how the deal is structured, and what's happening in your market the month you sell.

A credible range does three things:

• Anchors you in reality, so you don't over-price and sit unsold for two years — or under-price and leave six figures on the table.
• Shows you the gap between your business today and the top of the range, which is usually fixable.
• Gives you a defensible number to walk into any conversation with — a broker, a buyer, your accountant, your spouse.

What actually moves the number

Two businesses with identical revenue can sell for wildly different prices. The difference is almost always in these levers:

1. How much the business depends on you

This is the single biggest factor for owner-operated businesses. If the company only works because you're there every day — holding the customer relationships, quoting every job, carrying the knowledge in your head — then a buyer isn't buying a business, they're buying a job that happens to come with your problems. That caps the multiple. Businesses that run without the owner command a premium.

2. The quality of your earnings

Recurring revenue (contracts, retainers, maintenance plans, subscriptions) is worth far more than one-off project work, because a buyer can count on it. Healthy, stable margins beat a single great year. And customer concentration matters: if one client is 40% of revenue, that's a risk a buyer will price in.

3. Clean, believable financials

Buyers discount what they can't verify. Books that are organized, consistent, and separated from your personal spending don't just make due diligence easier — they raise the multiple, because they lower the buyer's perceived risk.

4. Growth and the story behind it

A business that's clearly growing, in an industry that's growing, with an obvious reason for the next owner to grow it further, earns a higher multiple than a flat or declining one — even at the same profit.

What a valuation is not

An instant valuation — including ours — is a fast, data-informed estimate. It's built to replace the blank stare, not to replace a formal appraisal. If you need a defensible report for tax, estate planning, a legal dispute, or a bank, you'll still want a Chartered Business Valuator (CBV) or a qualified appraiser. Think of a quick valuation as the step that tells you where you stand — and whether you even need the formal one yet.

Start with your number

You can't plan an exit, weigh an offer, or decide whether to wait two more years until you know roughly what your business is worth today. The fastest way to find out is to run the numbers you already know through a valuation and see your range — no broker, no retainer, no obligation.

When you're ready, the next read is How to Get Your Business Ready to Sell — the practical work that moves you toward the top of your range.