Business Evaluation Calculator
Business Evaluation Calculator
Typical small business multipliers range from 2.0 to 4.0
Enter your business financials to see an estimated valuation.
How to Calculate Evaluation for Your Business
Determining the value of a business is both an art and a science. Whether you are planning to sell, looking for investors, or just curious about your company's worth, knowing how to calculate evaluation is a crucial skill for any entrepreneur.
Our calculator uses the "Multiple of Earnings" method, which is the standard approach for most small-to-medium businesses. It takes your net profit (or EBITDA) and multiplies it by an industry factor (typically between 2x and 5x) to estimate market value.
Understanding the Inputs
- Annual Revenue: The total amount of money your business brings in before any expenses.
- Net Profit (EBITDA): Earnings Before Interest, Taxes, Depreciation, and Amortization. This is a proxy for the cash flow the business generates.
- Industry Multiplier: A variable that depends on your specific sector. For example, restaurants might trade at 2x profit, while SaaS companies might trade at 5x or more.
Why Use This Calculator?
Professional valuations can cost thousands of dollars. This tool gives you a quick, ballpark estimate to help you understand your baseline. If you are asking "how to calculate evaluation" for the first time, this is the perfect starting point to gauge where you stand in the market.
Frequently Asked Questions
How to calculate evaluation for a small business?
The most common way to calculate evaluation is by using a multiple of your seller's discretionary earnings (SDE) or EBITDA. Typically, small businesses sell for 2 to 4 times their annual profit.
What is a good profit multiplier?
A "good" multiplier varies by industry effectively. Main street businesses (cafes, retail) often see 2.0x - 3.0x. Professional services might see 3.0x - 4.0x. High-growth software businesses can see 5.0x to 10.0x or more.
Does debt affect business valuation?
Yes and no. Most small business sales are "cash-free, debt-free," meaning the seller keeps their cash and pays off their debt at closing. The valuation usually represents the enterprise value of the operations itself.