The 20-second answer
Small businesses are usually valued as SDE × an industry multiple. In 2026 the median small business sold at about 2.5×, 2.7× SDE. A business with $200,000 of SDE at a 2.6× multiple is worth roughly $520,000 but the multiple swings with industry and quality, so treat any single number as the middle of a range, not a price tag.
The SDE multiple method, explained
Seller's Discretionary Earnings (SDE) is what the business earns for a single owner-operator: net profit, plus the owner's salary and perks, plus interest, taxes, depreciation, and one-time or non-business add-backs. Multiply SDE by a market multiple and you get an estimated enterprise value. It's the dominant method for businesses under about $1M of earnings; larger deals shift to an EBITDA multiple.
2026 SDE multiples by industry
These are typical selling multiples from marketplace transaction data, a starting point, not a verdict on a specific business.
| Industry | Typical SDE multiple |
|---|---|
| Car wash | 4.73× |
| Laundromat | 4.12× |
| Child care / daycare | 3.40× |
| E-commerce / websites | 3.33× |
| HVAC | 2.80× |
| Auto repair | 2.70× |
| Plumbing | 2.62× |
| Landscaping / lawn service | 2.56× |
| Gym / fitness | 2.44× |
| Pest control | 2.35× |
| Accounting / tax | 2.33× |
| Cleaning / janitorial | 2.30× |
| Restaurant (single-unit) | 2.26× |
| All industries, median | ≈ 2.5×, 2.7× |
Source: BizBuySell Insight Report transaction data, aggregated by Sundance Financial and East Coast Advisory (2026). Figures are marketplace averages; individual deals vary widely. See our full industry multiples database for ranges and sourcing.
What moves the multiple up or down
Two businesses in the same industry with the same SDE can sell for very different prices. The multiple rewards durability of earnings:
- Owner dependence if the business is you, buyers discount it. Documented systems and a real team lift it.
- Customer concentration one client at 40% of revenue is a red flag; a broad base is a premium.
- Recurring revenue contracts and repeat customers beat project-to-project work.
- Clean books verifiable financials that survive a Quality of Earnings review support the top of the range.
- Growth a business growing 15%/yr earns a higher multiple than a flat one.
A valuation is not an offer
This estimate tells you whether a listing is roughly in the market. What you actually offer depends on due diligence, deal structure, and what the cash flow can service. Never anchor to the asking price.
Frequently asked questions
Most commonly as SDE × an industry multiple. In 2026 the median small business sold at about 2.5×, 2.7× SDE, ranging from ~1.5× for a weak single-unit restaurant to 4×+ for a laundromat or car wash.
Use SDE for owner-operated businesses under roughly $1M of earnings (SDE adds back one owner's salary). Use EBITDA for larger businesses run by a management team. See SDE vs EBITDA.
Sellers often list optimistically or add inventory/real estate on top. Your job in due diligence is to verify SDE and justify the multiple, then let cash flow and financing set your real ceiling.
Educational estimate only, not a formal business appraisal or financial advice. For a real transaction, get an independent valuation and a Quality of Earnings review.
