How a Small Business Is Valued: Earnings, Multiples and Asking Prices

Most small service businesses — cleaning, landscaping, home services, trades — are priced the same basic way: by how much money they make for an owner each year, times a multiple. This guide explains both parts in plain English, so you can read a listing's asking price or set your own. It gives no "typical" multiples on purpose: they vary by trade, size, region and year, and a figure without a source would mislead you.

1. The earnings: seller's discretionary earnings (SDE)

SDE is the money one full-time owner-operator takes out of the business in a year. It starts from the profit on the tax return or profit-and-loss statement and adds back the owner's own salary and payroll taxes, plus personal or one-off costs run through the business.
Common add-backs: the owner's pay, a family member's pay for work they don't really do, a personal car or phone, interest on loans the buyer won't take over, depreciation, and a one-off repair or legal bill.
Every add-back should have a reason and a receipt. As a buyer, ask for the list line by line; as a seller, prepare it before you list.
Larger businesses with a manager in place are often priced on EBITDA instead (profit before interest, taxes, depreciation and amortization, after paying a manager's salary).

2. The multiple

The price is usually SDE times a multiple. The multiple reflects how safe and how transferable those earnings are.
Things that raise it: recurring customers or written contracts, revenue spread across many customers, steady or growing revenue for several years, staff or a manager doing the work, clean books, a good reputation, and an owner willing to hand over properly.
Things that lower it: one or two customers bringing in much of the revenue, an owner who does most of the work or holds the key relationships, falling revenue, messy or missing records, old equipment that needs replacing, or a lease that is about to end.
A business broker or accountant who sells businesses in your trade and area can tell you what similar businesses have actually sold for recently.

3. What is included in the price

Most small-business prices include the equipment, vehicles and goodwill needed to run the business. Ask whether stock, cash in the bank and money owed by customers are included — often they are not, or are added at closing.
Check whether the business's debts stay with the seller (usual in an asset purchase).

4. Reading an asking price

Divide the asking price by the SDE the seller quotes to see the multiple they are asking for, then ask yourself whether the points in section 2 support it.
An asking price is where a negotiation starts. Sellers on BlueCrew Market write their own listings and we do not verify their figures — how listings are checked.
Some listings say "price on request" or "open to offers": ask for the SDE and the list of what is included before you talk about price.

5. Get a first estimate

Our free valuation (with a free account) gives a first range from your own numbers in a couple of minutes. For a formal valuation (for a loan, a partner buy-out or a tax matter), use a qualified business appraiser.
Buying? Use our due-diligence checklist before you make an offer. Selling? See how to sell a small service business.

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General information, not legal, tax or financial advice. Last updated October 13, 2026.