Business Valuation 101: How We Determine What Your Business Is Worth

Understanding Business Valuation

Whether you are selling your laundromat, buying a restaurant, or planning your exit from a construction company, understanding how businesses are valued is essential. At Your Biz Rep, we use proven methodologies tailored to your industry.

The Three Primary Valuation Methods

1. Seller's Discretionary Earnings (SDE)

Best for businesses with annual revenue under $5M. SDE represents the total financial benefit to a single owner-operator:

SDE = Net Income + Owner's Salary + Owner's Benefits + Depreciation + Interest + One-Time Expenses

Most small businesses sell for 2x to 4x SDE, depending on industry, growth, and risk factors.

2. EBITDA Multiple

For larger businesses ($5M+ revenue), we use Earnings Before Interest, Taxes, Depreciation, and Amortization:

Business Value = EBITDA × Industry Multiple

3. Asset-Based Valuation

Used when tangible assets represent significant value:

• Equipment-heavy businesses (manufacturing, construction)
• Real estate-inclusive sales
• Liquidation scenarios

What Increases Your Business Value

Based on our experience across hundreds of transactions:

1. Recurring revenue (subscriptions, contracts, memberships) — adds 1-2x to your multiple
2. Owner independence — businesses that run without the owner command premium prices
3. Clean financials — three years of tax returns and P&L statements
4. Growth trajectory — consistent year-over-year revenue growth
5. Diversified customer base — no single customer representing more than 15% of revenue
6. Transferable systems — documented processes, trained staff, technology infrastructure

The YBR Valuation Process

Our free business valuation includes:

1. Initial consultation — 30-minute call to understand your business
2. Financial analysis — review of tax returns, P&L, and balance sheets
3. Market comparison — analysis of comparable sales in your industry and region
4. Valuation report — detailed report delivered within 48-72 hours
5. Strategy session — discussion of findings and recommended next steps

Get Your Free Valuation

There is no obligation and no cost. We believe every business owner deserves to know what their business is worth.

Book your free valuation [blocked] or call (888) 314-7355.