● WHAT IS MY BUSINESS WORTH? · HOW TO VALUE A BUSINESS
The math is the easy half. A business is worth its real earnings times a multiple — and everything that matters lives in what sets that multiple.
Here’s how a buyer actually does it, and where the number really comes from.
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“What should I fix now
so it’s worth more later?”
Real businesses.
Real operating complexity.
Texas-based or meaningfully Texas-operated · Established owner-led companies
Commercial trades & field servicesManufacturingEnergy servicesTechnology servicesTHE SHORT ANSWER
A small business is valued as its normalized earnings times a multiple, and the multiple is set by risk — chiefly how repeatable the revenue is and how much the company depends on the owner. The formula is simple; the drivers behind the multiple are where the real number is won or lost.
Strip away the jargon and a small business is valued the same way almost every time: figure out what it really earns, then multiply that by a number that reflects how risky those earnings are. The first half takes work to get honest, and the second half — the multiple — isn’t a lookup. It’s earned or lost on a handful of drivers, and that’s where two businesses with the same earnings end up far apart.
The earnings a buyer values are not the number at the bottom of your tax return. A buyer wants normalized earnings — what the business really makes once you add back what’s personal or one-time and strip out anything that wouldn’t continue under a new owner. You’ll see this called SDE (seller’s discretionary earnings) for smaller owner-run companies, or EBITDA as they get bigger; same idea, the real, repeatable earnings. If your books can’t support those add-backs cleanly, you don’t get them — messy financials are a deal-killer, not a discount, and a buyer wants a clean, consistent history he can trust behind them.
This is the deep dive. For the overview, see our business valuation guide.
WHAT SETS THE MULTIPLE
The multiple is just a way of pricing risk: the more certain a buyer is that the earnings keep coming without you, the higher it goes.
Contracted, recurring work outscores the same dollars won on relationships that might leave with you. A buyer pays for what he can count on next year.
First check How much of next year’s revenue is already under contract or genuinely recurring?
The biggest single driver. Owner dependency commonly caps an owner-led business at one to two times earnings and costs at least a full turn of EBITDA — because if the judgment, the pricing, and the key relationships live in your head, the buyer isn’t buying a company, he’s buying a job.
First check Name the decisions, prices, and relationships that still live only with you.
This one doesn’t lower the multiple so much as remove the buyer. If he can’t tie your earnings to your bank activity, he stops.
First check Can you walk a stranger from your bank deposits to your reported earnings?
One customer who is half your revenue is a risk a buyer prices down. Tight scheduling, job costing, and collections are what produce the earnings in the first place.
First check If your largest customer left, how much of the business goes with them?
WHERE THE REAL NUMBER COMES FROM
Type “what is my business worth” into a calculator and it multiplies your revenue or earnings by an industry-average multiple and spits out a number. It feels precise. It’s usually wrong in the direction that hurts you, because it can’t see the one thing that matters most — how much the business depends on you — and it assumes clean, normalized books it never looked at. The International Business Brokers Association has stated that 80% of businesses listed with an IBBA broker never sell; a lot of that gap is owners who anchored on a calculator number and never fixed the drivers underneath it. A number off a form is a starting fantasy, not a valuation.
There are two honest reads you can get, and they’re different. A directional read tells you where you stand and what to fix first — that’s what our free self-assessment does, privately, in a few minutes, no email. A formal appraisal — a business appraisal — is a defensible number for a specific trigger, like a partner buyout, a divorce, or an SBA loan, and it’s a separate, paid exercise. Most owners asking “what’s it worth” need the read first, not the certificate.
We’re not brokers and we’re not a valuation mill. We help you read your own number the way a buyer will, then fix what’s dragging it down — reduce how much runs through you, clean up the books, firm up the recurring work — early enough that it counts, whether you ever sell or not. Advisor-led, delivered by a SweetSpot consultant under Daniel’s direction, by operators who’ve done this in real field-heavy businesses.
The number is won or lost on the drivers, not the formula.
That’s the part we help you fix.
A description of the work, not a reported client result. SweetSpot publishes no client names or outcomes.
YOUR NEXT STEP
However you start, the goal is the same: find the first driver worth strengthening in your business.
Leave your number and we connect you with a SweetSpot advisor right away — the system rings you and the advisor at the same time. No hold, no waiting for a call back later.
A personal reply within one business day. Tell us where you’re stuck and we’ll point you to the first driver to look at.
Send a messageA few minutes; no email needed to see your results. Rate your business against the drivers that set the multiple.
See where you standIf a deeper look makes sense, some owners go on to a Three Engine Diagnostic — a paid, one-day, on-site review of operations, sales, and finances. No obligation to get there.
COMMON QUESTIONS
Normalized earnings — the real, repeatable earnings after honest add-backs — times a multiple set by risk. The multiple rises the more the business runs without the owner, the cleaner the books, and the more contracted the revenue.
There’s no single number, and any page that gives you one is guessing. The multiple is set by the drivers above; the more of them you fix, the better it lands. What we can tell you is where yours stands today and what’s holding it down.
Both are ways of stating the real, repeatable earnings a buyer values. SDE (seller’s discretionary earnings) is used for smaller, owner-operated companies and adds the owner’s pay back in; EBITDA is used as companies get larger and have real management in place. Same purpose: strip the number down to what actually recurs.
Not to get started. A formal appraisal is for a specific legal or financing trigger. For “where do I stand and what should I fix,” the free self-assessment is faster and cheaper.
Yes, and it’s mostly the same work as getting ready to sell: move decisions off yourself, clean up the financials, firm up recurring revenue. Those raise the multiple whether you sell or not.