What is my business worth?

How the estimate works

Every live listing on BizExchange that shows both an asking price and a profit gives one multiple: the asking price divided by the profit. The calculator takes the multiples for your industry (once there are at least 20), and your answers move the estimate between the lower and upper ends of that range. Your profit times the multiple, plus any stock, is the estimate. The figures refresh daily.

Most small businesses change hands at a multiple of annual profit, plus stock at valuation. The multiple depends on how much of the profit survives a change of owner: businesses that run under management, keep their lease and keep their customers sell for more times profit than owner-operated ones.

Valuing a business properly

1. Start with adjusted profit: net profit plus the owner's wage and personal expenses added back ("owner's benefit"), or EBITDA for larger businesses with a manager in place.
2. Apply a multiple. Owner-operated micro businesses typically see 1 to 2.5 times owner's benefit; businesses under management with a long lease, 2.5 to 4 times EBITDA; larger or specialised businesses can go higher. These are ranges buyers argue about, not rules.
3. Add stock at cost, and any freehold property separately at its own valuation.

What moves the multiple

• Lease: term remaining and options. A short lease can halve the price.
• Dependence on the owner, one customer or one supplier.
• Clean, lodged accounts. Cash that is not in the books is not in the price.
• Trend: three years of growth is worth more than one good year.
• Transferable licences, contracts and staff.

The BizExchange Asking Price Report will publish median asking prices and price-to-profit multiples by industry and state, built only from listings on this site, once there is enough data. Read about the report. Asking prices are what sellers ask, not what buyers pay.

Not financial or valuation advice. For a figure you can rely on, engage a valuer or an accountant who values businesses.