Business Valuation Calculator — Estimate Your Business Worth

Name: Business Valuation Calculator
Author: James Blanckenberg

Last reviewed: 17 May 2026

Three standard valuation methods side-by-side — revenue multiple, EBITDA multiple, and a 5-year discounted cash flow with terminal value.

Most small businesses are valued using three methods: revenue × industry multiple, EBITDA × industry multiple, and discounted cash flow (DCF). Typical SME EBITDA multiples are 3–7×; SaaS revenue multiples 3–8×; service businesses 2–4× EBITDA. The midpoint of the three methods anchors realistic asking prices.

How it works

The calculator runs three valuation methods in parallel: revenue times an industry multiple (good for high-growth businesses without profit yet), EBITDA times a multiple (most common for profitable SMEs), and a discounted cash flow projection (rigorous but assumption-heavy). The range across the three methods is more useful than any single number — buyers and sellers should expect to negotiate within that range.

Common mistakes

Anchoring to a single number — owners often quote one valuation figure as if it were the price. A buyer will run the same three methods and produce their own range. The realistic deal happens inside the overlap of the two ranges. Always present a range and treat the midpoint as a starting point for negotiation, not a fact.
Confusing sunk effort with value — a buyer is purchasing future cash flow they will inherit, not the years of work that built the business. Time, founder sacrifice, and personal capital invested do not appear in any valuation formula. Strip emotional attachment to the cost basis before negotiating; otherwise asking prices drift 30–50% above any defensible number.
Using inflated EBITDA — "owner-adjusted" or "addback" EBITDA often pads the number with personal expenses run through the business, one-off legal fees, or above-market owner salary normalised back to zero. Most buyers reverse aggressive addbacks during due diligence and renegotiate the price downward. Use a conservative EBITDA and let the buyer find the upside themselves.

When to use this calculator

Use this when preparing for a sale, evaluating an acquisition, raising equity capital, or setting a defensible internal valuation for share buybacks, ESOP grants, or estate planning. The three-method range is also a useful annual scorecard even when no transaction is planned.

If you are evaluating a single investment within the business rather than the whole entity, the ROI Calculator or Payback Period Calculator is more focused. To project the revenue trajectory that feeds the valuation, the Revenue Growth Calculator is the right starting point.

See the formula

Revenue Valuation = Annual Revenue × Revenue Multiple
EBITDA Valuation  = EBITDA × EBITDA Multiple

DCF Valuation:
  Year N PV       = FCF × (1+growth)^N / (1+discount)^N
  Terminal Value  = FCF × (1+growth)^6 / (discount − growth)
  Total DCF       = Sum of 5-year PVs + PV of Terminal Value

Worked example

A US plumbing-services business is preparing to sell. Twelve- month revenue is $1,400,000. EBITDA — earnings before interest, tax, depreciation, and amortisation — is $320,000 (a 23% EBITDA margin, healthy for skilled-trades services). Seller's Discretionary Earnings (SDE) — EBITDA plus the owner's salary and personal expenses run through the business — is $260,000. Three-year average revenue growth is 8% annually.

Three valuation methods produce three different numbers. Revenue multiple at 0.6× (typical for trades services) = $840,000. EBITDA multiple at 4.2× (the midpoint of the 3–5× range typical for $300k-EBITDA service businesses) = $1,344,000. SDE multiple at 3.0× (typical for owner-operator businesses) = $780,000. The defensible asking range is roughly $850k to $1.35M, with the centre of gravity around $1.05M.

The negotiation usually pits seller-anchored SDE against buyer-anchored EBITDA. Sellers prefer SDE because the owner-salary add-back is real (a new owner won't draw the same salary) — but buyers know they need to install professional management, which costs roughly the same. The EBITDA multiple is the more honest number for a buyer who will not be operating the business hands-on. A reasonable deal closes near 4.0× EBITDA = $1.28M with seller financing on 20–30% of the price, contingent on a 12-month earn-out tied to maintaining 8% growth. Independent SBA-backed appraisals are normally required by lenders financing the acquisition.

Frequently Asked Questions

How do I value a small business?

The three most common methods for valuing a small business are: (1) Revenue Multiple — annual revenue × an industry-specific multiple, (2) EBITDA Multiple — earnings before interest/tax × a multiple (most reliable for profitable businesses), and (3) Discounted Cash Flow — present value of projected future cash flows.

What multiple is used to value a small business?

Multiples vary by industry and profitability. Service businesses typically sell at 2–4× EBITDA. SaaS businesses at 4–10× revenue. Retail at 0.5–1.5× revenue. Manufacturing at 4–6× EBITDA. Businesses with strong recurring revenue and low customer concentration command higher multiples.

What makes a business more valuable?

Key value drivers: recurring or contracted revenue, high customer retention, documented systems and processes (not owner-dependent), diversified customer base, strong brand, barriers to competition, and consistent year-on-year growth. Businesses that run without the owner command the highest multiples.

How much can I sell my business for on Flippa?

Online businesses (content sites, SaaS, ecommerce) on Flippa typically sell for 30–42× monthly net profit. A site earning $3,000/month net would sell for $90,000–$126,000. Larger, more established businesses with proven traffic sell at higher multiples.

What is EBITDA and why is it used for business valuation?

EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) is used because it removes non-cash charges and financing decisions, giving a cleaner picture of operational profitability that buyers can compare across businesses with different capital structures and tax situations.

Do business valuations differ in the US, UK, and South Africa?

Methods are universal but multiples vary. US small businesses typically sell at 3–5× EBITDA (higher in tech), UK SMEs at 4–6× EBITDA (boosted by easier acquisition financing), and South African businesses at 2–4× EBITDA (higher country risk discount and thinner buyer pool). DCF discount rates also differ: 10–12% US, 9–11% UK, 14–18% SA. The same business is often worth 30–50% less in SA than in the US for structural reasons.

What is the most common business valuation mistake?

Confusing what the owner thinks the business is worth (often based on years of effort and personal investment) with what a buyer will actually pay (based on future cash flow they'll inherit). Buyers don't care about sunk effort. Always start with the multiple methods (revenue, EBITDA, DCF) and treat the range they produce as the negotiation window — anchoring to a single number, especially a wishful one, kills deals.

What if my business is making a loss or has zero EBITDA?

EBITDA-based valuation breaks down — a loss-making business cannot be valued on a multiple of negative earnings. Switch to revenue multiple (works for high-growth businesses without profit) or asset-based valuation (value of inventory, equipment, IP, customer contracts). Many software startups sell at 4–10× revenue even at a loss because buyers project future profitability. A traditional business with no profit usually sells at 0.3–0.8× revenue or for asset value only.

I have my valuation range — what do I do with it?

Three uses. One: if selling, set the asking price at the top of the range and negotiate down toward the midpoint. Two: if buying, anchor your offer near the bottom of the range and use due diligence findings to justify staying low. Three: even if not transacting, the valuation is your scorecard — track it annually, and the levers that move it (recurring revenue, owner-independence, customer concentration) become your strategic priorities.

How is business valuation different from a fair price?

Valuation is an analytical estimate based on numbers — EBITDA multiples, DCF assumptions, comparables. Fair price is what the market actually pays, which depends on negotiation, buyer competition, deal terms, and timing. A business valued at $500K via DCF might sell for $400K to a single buyer in a slow market, or $650K in a bidding war. Use valuation to know your defensible range; expect the actual price to land within it but rarely at the calculated midpoint.

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Read the comparison

DCF vs Multiples: Small-Business Valuation in 2026

DCF is rigorous; multiples are practical. Which method buyers actually use for sub-$5M businesses — and how to run both side-by-side in 5 minutes.

Methodology & sources

Rates last verified: May 2026

Read the full methodology →

DCF uses 5-year explicit projection + Gordon growth terminal value. The terminal value typically accounts for 60–80% of total DCF — small changes to growth or discount rate produce large swings. Use the range across methods, not the DCF alone.

Rates are reviewed annually or when a region changes its headline rate. If you spot one that's out of date, email [email protected].

For information only. This calculator does not constitute financial, accounting, or tax advice. Consult a qualified professional before making business decisions.

Try these scenarios

Pre-filled examples — click any chip to load the inputs and result.

How to value a small business

Enter revenue, EBITDA, and free cash flowLast 12 months of revenue; EBITDA; and annual free cash flow for the DCF method.
Set the revenue and EBITDA multiplesUse industry averages shown in helper text — service 2–4× EBITDA, SaaS 3–8× revenue, retail 0.5–1.5× revenue.
Set discount rate and growth rate for DCFDiscount rate is typically 15–25% for SMEs; growth rate is your expected annual revenue growth.
Read the valuation rangeThree methods produce three values. Use the range and midpoint as your asking-price anchor — buyers expect to negotiate within a range.

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Written by

James Blanckenberg

Founder, BusCalcTools

Founder of BusCalcTools and FinnCalc. Builds practical financial calculators for small business owners and freelancers across the US, UK, and South Africa.

Editorial review by: James Blanckenberg, Founder & Editor

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