Question: What Does The Average Small Business Sell For?

Small businesses typically sell for low earnings multiples due to owner participation.

Businesses where the owner is actively-involved typically sell for 2-3 times the annual earnings of the company.

A business that earns $100,000 per year should sell for $200,000-$300,000.

How much do small businesses sell for?

There is plenty of room for judgment, but by and large, a profitable, reasonably healthy, small business will sell in the 2.0 to 6.0 times EBIT range, with most of those in the 2.5 to 4.5 range. So, if annual cash flow is $200,000, the selling price will likely be between $500,000 and $900,000.

How do you value a small business?

To find the value of your business, subtract liabilities from the assets. For example, if you have $100,000 in assets and $30,000 in liabilities, the value of your business is $70,000 ($100,000 – $30,000 = $70,000). With the asset-based method, you can find the book value of your business.

How much does the average small business owner make?

You might be wondering, how much does the average business owner make? According to PayScale’s 2017 data, the average small business owner income is $73,000 per year. But, total earnings can range from $30,000 – $182,000 per year.

How do you price a business for sale?

What’s Your Right Asking Price

  • Step 1: Get your financial statements in order.
  • Step 2: Estimate the value of the tangible assets of your business.
  • Step 3: Prepare your statement of seller’s discretionary earnings.
  • Step 4: Estimate the earnings multiple that’s likely to apply when pricing your business.