Your business is worth what a buyer will pay for it - but you can estimate that figure using three main methods: a multiple of your adjusted earnings (the most common), the value of your net assets plus goodwill, or the value of your expected future earnings. For most small Australian businesses, value is calculated as adjusted profit (SDE) multiplied by an industry multiple, then cross-checked against recent comparable sales.
"How much is my business worth?" is the first question every owner asks before selling - and the honest answer is that no single number is set in stone. Value depends on your profit, your assets, your growth prospects and what similar businesses are actually selling for. This guide explains the methods and formulas in plain English, shows you what drives your price up or down, and gives you a free tool to get an instant estimate.
Want a quick figure first? Try our free business valuation calculator - enter your numbers and get an estimate in minutes, then read on to understand what's behind it.
How do you value a business?
You value a business using one or more of five methods: market comparison (what similar businesses sold for), an earnings multiple (adjusted profit × an industry multiple), an EBITDA multiple (for larger businesses), net asset value (assets minus liabilities), or capitalised future earnings. Most valuations blend two or three of these to reach a defensible figure.
Here are the five methods explained simply:
Market comparison - benchmark your business against recent sales of similar businesses in your industry and area. It's the reality check every other method should be tested against. You can gauge the market by browsing comparable businesses for sale.
Earnings multiple (SDE method) - the most common approach for small, owner-operated businesses. You take your adjusted annual profit (Seller's Discretionary Earnings) and multiply it by an industry multiple.
EBITDA multiple - used for larger or more structured businesses, applying a multiple to earnings before interest, tax, depreciation and amortisation.
Net asset value - add up tangible and intangible assets, subtract liabilities. Straightforward, but it ignores future earning potential, so it usually understates a profitable business.
Capitalised future earnings - places a present-day value on the profits the business is expected to generate. Best suited to businesses with strong, predictable growth.
What is the formula to value a business?
The most common small-business valuation formula is: Business Value = Adjusted Profit (SDE) × Industry Multiple. For example, a business with $150,000 in adjusted annual profit and a multiple of 2.5 would be worth about $375,000. An alternative is the ROI formula: Value = (Net Annual Profit ÷ Desired ROI%) × 100.
Let's break the two key formulas down:
Earnings multiple: Business Value = SDE × Multiple SDE is your net profit plus the owner's salary and any personal or one-off expenses added back. The multiple depends heavily on your industry, size, growth and how reliant the business is on you - small owner-operated businesses often fall in a range of roughly 1.5 to 3.5 times SDE, but this varies widely and should never be treated as fixed.
Return on investment (ROI): Value = (Net Annual Profit ÷ ROI) × 100 This frames price around the return a buyer expects. A buyer wanting a 30% return on a business earning $120,000 would value it at around $400,000.
Asset-based: Value = Total Assets − Total Liabilities (+ Goodwill)
Our free valuation calculator applies these methods for you so you don't have to do the maths by hand.
How much is my business worth? Getting an estimate
To estimate your business's worth, calculate your adjusted profit (SDE), apply a realistic industry multiple, then sanity-check the result against comparable sales and your net asset value. A free online calculator does this instantly, but for a formal figure - for a sale, finance or legal matter - you'll want a professional valuation.
The quickest path is to run your numbers through our business valuation tool for an instant ballpark. Treat that estimate as a starting point for conversations, not a guaranteed sale price - the real number is set by the market and finalised in negotiation. For a worked, real-world illustration of how the methods combine, see our Melbourne restaurant valuation walk-through.
What factors affect how much your business is worth?
A business's value is driven up by strong and consistent profit, recurring revenue, a diverse customer base, low reliance on the owner, growth potential and clean financial records. Value is dragged down by declining sales, heavy dependence on the owner or one big client, messy books, a short lease or a shrinking industry.
The factors buyers weigh most heavily:
Financial performance - consistent, verifiable profit is the single biggest driver.
Recurring revenue - contracts and repeat customers are worth more than one-off sales.
Owner dependence - a business that runs without you is worth far more than one that is you.
Customer concentration - relying on one or two big clients is a risk that lowers value.
Growth prospects - clear, credible upside supports a higher multiple.
Clean records - well-organised financials build buyer confidence and speed up the sale.
Lease and location - a secure lease and good site protect value, especially in hospitality and retail.
What is goodwill and how does it affect value?
Goodwill is the value of a business beyond its physical assets - its brand reputation, loyal customer base, trained staff, systems and location. It's an intangible asset that often makes up a large share of a profitable business's price, which is why asset-only valuations tend to understate what a business is really worth.
Two businesses with identical equipment can be worth very different amounts because of goodwill. A strong brand, a repeat customer base and a great location all command a premium a buyer will pay for - and capturing that premium is exactly why the earnings-multiple method usually gives a truer figure than net assets alone.
How can you increase your business's worth before selling?
To increase your business's value, boost and document consistent profit, build recurring revenue, reduce the business's reliance on you, tidy up your financial records, secure your lease and diversify your customer base. Ideally start 12 months before selling - small improvements to profit and buyer confidence can lift both the multiple and the final price.
The highest-impact moves:
Grow and prove your profit - even modest, documented increases lift value because they're multiplied.
Reduce owner dependence - systemise operations and train staff so the business runs without you.
Lock in recurring revenue - convert one-off customers into contracts or subscriptions.
Clean up the books - organised, accurate financials remove buyer doubt and justify your price.
For the full pre-sale playbook, see our ultimate guide to selling a business in Australia and our checklist of what to know when selling a business.
Should you get a professional business valuation?
Use a free online calculator for an instant estimate when you're exploring your options or setting a rough asking price. Get a professional valuation from a certified business valuer or your accountant when you need a formal, defensible figure - for a sale, finance application, partnership buyout, divorce or tax matter. Both have their place; start with the calculator.
A DIY estimate is perfect for early planning and pricing conversations. But when real money or legal outcomes ride on the number, a certified valuer brings credibility and industry-specific insight a calculator can't. The smart sequence is to run the free calculator first, then commission a formal valuation once you're serious about selling.
How to use Exity's free business valuation calculator
To use the calculator, enter your business's financial details - revenue, adjusted profit, assets and industry - and it applies standard valuation methods to return an instant estimate of your business's worth. It's free, takes a few minutes, and gives you a realistic starting figure before you list or speak to a valuer.
It's the fastest way to answer "how much is my business worth?" without spreadsheets. Have your recent profit and loss figures handy, add back any owner's salary and one-off expenses to find your true earnings, and let the tool do the rest. When you're ready, you can get your free business valuation here.
The bottom line
Your business is worth a blend of its earnings, its assets and its goodwill - tested against what real buyers are paying. Start with a free estimate to get your bearings, focus on the factors that lift value (profit, recurring revenue, low owner dependence, clean books), and bring in a professional when the figure really counts.
Ready to find out? Get your free business valuation, and when you're ready to sell, list your business on Exity in front of buyers who are actively looking.
Frequently asked questions
How much is my business worth? Your business is worth what a buyer will pay, estimated by multiplying your adjusted annual profit (SDE) by an industry multiple, then cross-checking against comparable sales and net asset value. A free online business valuation calculator gives an instant estimate, while a certified valuer provides a formal figure for a sale or legal matter.
What is the formula to value a small business? The most common formula is Business Value = Adjusted Profit (SDE) × Industry Multiple. Small owner-operated businesses often use a multiple of roughly 1.5 to 3.5 times SDE, though this varies by industry, size and growth. An alternative is the ROI formula: Value = (Net Annual Profit ÷ Desired ROI%) × 100.
How many times profit is a business worth? Small businesses commonly sell for around 1.5 to 3.5 times their adjusted annual profit (SDE), while larger, more structured businesses may sell on an EBITDA multiple. The exact multiple depends on industry, growth, recurring revenue and how dependent the business is on the owner. Always benchmark against comparable sales.
Is a free business valuation calculator accurate? A free calculator gives a useful ballpark estimate based on standard valuation methods, ideal for early planning and setting a rough asking price. It can't capture every nuance of your business, so for a formal, defensible figure - for a sale, finance or legal purpose - you should also get a professional valuation.
What increases the value of a business? Consistent and growing profit, recurring revenue, a diverse customer base, low reliance on the owner, strong growth prospects and clean financial records all increase a business's value. Reducing owner dependence and locking in repeat revenue are among the most effective ways to lift both the multiple and the final sale price
