Business Valuation Calculator
Estimate a business's value from annual revenue or net income and an adjustable industry valuation multiple, with common industry presets.
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Estimated Business Value
$2,000,000
Based on 4× annual net income
How Business Valuation by Multiple Works
A quick way to estimate what a business might be worth is to multiply a key financial figure — annual revenue or annual net income — by an industry-appropriate multiple. Revenue multiples are typically used for high-growth or pre-profit companies, while earnings (net income) multiples are more common for established, profitable businesses. Multiples vary widely by industry, growth rate, margins, and risk, so the presets here are starting points, not precise valuations.
Example
A small business with $500,000 in annual net income, valued at a 4x earnings multiple typical for an established small business, comes out to an estimated value of $2,000,000. The same business valued on a 1.5x revenue basis instead (if revenue were $2,000,000) would give a different, often lower, estimate — which is why matching the right multiple type to the business stage matters.
Common Use Cases
- Getting a rough valuation ballpark before a sale, acquisition, or investment conversation.
- Comparing how different industry multiples change a business's estimated value.
- Setting expectations ahead of a formal business appraisal.
- Sanity-checking a valuation offered by a buyer or investor.
FAQs
Why do multiples vary so much by industry?
Multiples reflect growth potential, profit margins, risk, and how easily a business can scale. High-growth software companies often command higher revenue multiples than low-margin, capital-intensive businesses like retail or manufacturing, which are typically valued closer to their earnings.
Should I use revenue or earnings for my valuation?
Use earnings multiples for profitable, stable businesses where net income is a meaningful number. Use revenue multiples for early-stage or high-growth businesses that may not yet be profitable but have strong top-line growth investors are willing to pay for.
Is this a substitute for a professional valuation?
No — this multiple-based method gives a quick estimate for planning purposes. A formal business valuation typically also considers assets, liabilities, discounted cash flows, comparable transactions, and other factors a simple multiple doesn't capture.