Nobody really cares what your revenue is. They care what your profits are.
A reasonable estimate is 3x owner benefit if it's small.
If you have meaningful assets it would increase the multiple.
this post was submitted on 11 Nov 2023
1 points (100.0% liked)
Entrepreneur
0 readers
1 users here now
Rules
- No Personal Attacks - criticism of ideas is allowed, attacking people is not.
- Self Posts Only - links can only provide supplementary material. Your post must contain enough content to have a discussion.
- No “How To Get Rich Quick” posts - This community is not about making a quick buck. Posts asking the community how to make $X, without making specific reference to a reasonable idea, are not tolerated.
- Avoid unprofessional communication - Please treat fellow entrepreneurs like respected coworkers, label conversations if NSFW and avoid deliberate provocations.
Please feel free to provide evidence-based best practices, share a micro-victory, discuss strategy and concepts with a frame work, ask for feedback, and create professional conversation. Treat every post as if you're at work and representing the best version of yourself.
founded 10 months ago
MODERATORS
Try a business valuation calculator, they do pretty well. And also try to estimate it with multipliers of ebitda for example. Try multiple ways to come to a suitable average
There's no one-size-fits-all answer for this. It heavily depends on your industry, EBITDA, profit margins, etc. Team size, assets, so on and so on.
Your best bet is to start researching how companies are evaluated on YouTube, then check out a few calculators you can find in Google. It's also a good idea to Google search big companies in your industry that were recently acquired and work your way backwards from there.
2-3 years of true profit for small businesses. No one would pay 5 years of revenue, that's far too high.
Profit not revenue. The grey area is mainly goodwill and assets.
On top of what others said just I'll emphasize
Depends on risk, maturity of business and growth potential. Most small businesses have a range of 1.2 to 3.
You may also find that you're industry has a range and what it's based on such as total sales, revenue, customer list ect
5x+ on revenue is typically what you see for growth startups, with high margins. A heuristic indicator would be in VCs invested in it, for everything else 3-5x on profit is what I encountered most.
Revenue is vanity, profit is sanity
I'll pay you three times net profit