If you’ve ever thought about selling your business, bringing on investors, or simply understanding how much your business is worth, you need a business valuation.
But don’t worry — you don’t need a complicated MBA to figure it out! 📚✨
Our easy Business Valuation Calculator will walk you through the basics so you can get a fast, ballpark estimate today.
Table of Contents
🙋♀️ What is Business Valuation?
Business valuation is the process of estimating the economic value of a business.
It answers a simple but critical question:
“If I wanted to sell my business today, how much would someone likely pay for it?”
There are many methods professionals use to value a business, but for small businesses and startups, the two most common methods are:
- Earnings Multiplier Approach (based on profit or EBITDA)
- Revenue Multiplier Approach (based on annual revenue)
We’ll keep it simple here — using multiples to quickly estimate value.
📈 What You Need to Calculate Business Value
To use our calculator, you’ll need:
- Annual Revenue (Total sales per year)
- Annual Profit or EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
- Industry Multiplier (Typically based on business type — for example, a software company may have a higher multiple than a restaurant)
Multiples are usually:
- 2–3× earnings for traditional service businesses
- 4–6× earnings for tech companies or fast-growing businesses
- 0.5–2× revenue for businesses with slim margins
📋 Quick Examples
Consulting Firm
Imagine you own a consulting firm making $100,000 in profit annually.
If typical firms like yours sell for 2.5× profit, your business might be worth:
$100,000 × 2.5 = $250,000Not bad, right? 💼✨
SaaS Business
Suppose your SaaS app has:
- $400,000 Annual Recurring Revenue (ARR)
- $80,000 EBITDA
- Growing 30% year-over-year
- Low customer churn (under 5%)
✅ EBITDA method:
80,000 × 8 (multiple) = $640,000 value
✅ Revenue method:
400,000 × 5 (ARR multiple) = $2,000,000 value
🔵 Investors would likely use the higher revenue multiple because it's SaaS with recurring revenue and great metrics!
📈 Earnings and Revenue Multiples by Industry
| Industry | EBITDA Multiple (Profit-Based) | Revenue Multiple (Sales-Based) | Notes |
|---|---|---|---|
| SaaS (Software as a Service) | 5× to 12× | 3× to 8× ARR | Higher multiples for low churn, strong growth |
| E-commerce | 3× to 5× | 0.8× to 1.5× Revenue | Strong brands command premium |
| Digital Marketing Agencies | 3× to 6× | 1× to 2× Revenue | Depends on recurring contracts |
| Professional Services (Consulting, Accounting) | 2× to 4× | 1× to 1.5× Revenue | Client loyalty drives value |
| Healthcare Services | 5× to 8× | 1.5× to 3× Revenue | Specialized practices get higher valuations |
| Manufacturing | 4× to 6× | 1× to 1.5× Revenue | Unique IP or niche markets add value |
| Construction and Trades | 3× to 5× | 0.7× to 1.2× Revenue | Commercial contracts boost multiples |
| Retail (Physical Stores) | 2× to 4× | 0.5× to 1× Revenue | Big brands > small shops |
| Logistics and Transportation | 3× to 6× | 1× to 1.5× Revenue | Recurring shipping contracts raise value |
| Restaurants | 1.5× to 3× | 0.3× to 0.8× Revenue | High turnover, low margins |
| Hospitality (Hotels, Rentals) | 3× to 6× | 1× to 2× Revenue | Location and occupancy rates critical |
| Financial Services (Brokers, Wealth Management) | 4× to 8× | 2× to 4× Revenue | Assets under management (AUM) drive valuations |
| Subscription Box Businesses | 3× to 5× | 1× to 2× ARR | High churn lowers multiples |
| Online Education / E-learning | 4× to 7× | 2× to 5× Revenue | Fast-growing niche after 2020 |
| Mobile Apps (With Revenue) | 3× to 6× | 1× to 3× Revenue | Premium for apps with paying users |
💡 Quick Tips
- SaaS businesses are often valued directly based on Annual Recurring Revenue (ARR) instead of profit, especially early stage.
- Services businesses (like consulting or agencies) tend to lean more on profit (EBITDA) multiples.
- Product-based businesses (like e-commerce) care about both — but growth rate and brand really move the needle.
🎯 Key Tips for a More Accurate Valuation
- Higher growth = higher multiple! 📈
- Recurring revenue = higher multiple! 🔁
- Customer concentration (one big client) = lower multiple ⚠️
- Solid management team = higher multiple 🙌
Always remember:
👉 This calculator gives you a quick estimate. For big deals, hire a professional appraiser or broker.