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Estimate what a small business is worth from its Seller's Discretionary Earnings (SDE) and a published industry multiple.
BizDealIQ provides educational estimates only — not financial, investment, tax, legal, or business-valuation advice. Multiples and outputs are rules of thumb, not appraisals. Always do your own due diligence and consult licensed professionals before making an offer or purchasing a business.
How small businesses are valued
Most small, owner-operated businesses are priced as a multiple of SDE (Seller's Discretionary Earnings) — the total cash benefit to a single owner-operator. SDE starts with net profit and adds back the owner's salary, perks, one-time expenses, interest, and depreciation.
The multiple itself depends heavily on the industry, the quality of the earnings, and how dependent the business is on the current owner. A business with recurring revenue, a stable team, and documented systems earns a higher multiple than an owner-dependent shop with lumpy sales. Use the range — not a single number — and verify against comparable sales.
When real estate is included, it is typically valued separately (often on a cap-rate basis) and added on top of the business valuation.
Want a deeper read on a specific deal?
The BizDealIQ AI Deal Analyzer scores the deal, sanity-checks the asking multiple, and proposes a seller-financed offer.
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