What Is Your Small Business Worth Right Now?

May 16, 2025

Happy Friday! Your small business buying newsletter that pops up quicker than a spring dandelion.  No need to pull this one. 

This week's spring flower:

  1. What Is Your Small Business Worth Right Now?

  2. Think like a chef

  3. Zest

1. What Is Your Small Business Worth Right Now?

What’s it worth? 

Let’s talk small business valuations. Whether you're buying, selling, or just nosy about what that HVAC business in Royal Oak is going for, it’s good to know what a business is really worth.

Spoiler: it’s not whatever your buddy’s cousin, who thinks Pokemon is a retirement, told you after three bourbons.

First: The Golden Metric – SDE

Most businesses under $10M in revenue are valued using Seller’s Discretionary Earnings (SDE). That’s your profit, plus the owner’s salary, plus any “discretionary” expenses like a truck, your cousin on payroll, and that “business development” golf membership.

SDE is what a new owner could expect to put in their pocket if they stepped in today.

Typical Multiples (This Is the Good Stuff):

  • Local Services (HVAC, Landscaping, Auto Repair): 2x – 3x SDE

  • Niche B2B or Professional Services (Consulting, IT, Engineering): 3x – 5x SDE

  • Digital or Productized Service Businesses (Managed IT, SaaS-ish models): 4x – 6x SDE

  • Owner-Dependent, No Systems (Solo Operators, Jack-of-All-Trades): 1.5x – 2x SDE - buying yourself a job

How to Pump Up the Multiple (without needing a gym membership)

If you’re a seller—or a buyer looking to build value post-acquisition—here’s what moves the needle:

  1. Recurring Revenue: Monthly retainers or contracts are catnip for buyers. Predictable income = less risk = higher multiple.

  2. Owner Not in the Weeds: If the owner can go on a two-week vacation without the business crumbling, that’s good. If not? You’re buying a job.

  3. Clean Books: A tidy P&L, organized tax returns, and no “creative” accounting go a long way.

  4. Documented Systems: SOPs, employee handbook and dashboards make a biz easier to run and more valuable.

  5. Customer Concentration: No single client should be more than 20–30% of revenue. One bad breakup shouldn’t kill the company.

The Bottom Line

Start with SDE. Multiply it based on risk, revenue type, and operations.

Most small businesses in Metro Detroit land in the 2–3x SDE range.

Want more? Build a business that runs without you, prints cash, and doesn’t give buyers anxiety.

2. Think like a chef

I saw firsthand this week how a $1B annual revenue company is integrating AI into everything they are doing to save money and also enhance their product experience for customers. 

We will either get beat BY AI or we will compete WITH AI. 

Here's how I compete with AI, one of my favorite business influencers Cody Sanchez put it into a relatable framework. 

We all need to be Chefs with AI…

And there are 3 steps to success in a kitchen. 

Prep with AI

Cook with AI 

And 

Plate (scale) with AI 

Prep with AI

Let AI do all the basic tasks; the cutting, measuring, cleaning.   The boring stuff that AI is great at and the things that are a waste of our time. 

I use AI as the start of any task. To build spreadsheets to capture data or create an outline for an important communication. Or brainstorm trends and challenges in an area of the business. 

Cook with AI

This is where the human chef comes in to taste (review), season and check the quality to make sure the ingredients will produce the right result.   We become the taster of ideas, content and spreadsheets to make sure it will work for our customers and our business. 

Plate with AI

Once that dish (workflow, prompt or tool) has that fingers-to-the-lips-mamma-Mia-che-buono.  Don't stop there.  Build it so it can be repeated. 

Use AI to make it repeatable for every one. 

“Prep with AI → Cook with AI → Plate with AI”

Complacency is expensive, experiments are cheap.

Happy Friday ya’ll!

3. Zest

My youngest, Leona, what I love about her is her zest for life. 

She finds excitement in everything and everyone.

This is her making a weed (dandelions), a prop that entertained her and had us laughing.

Wishing you and I the same zest for life as a 3-year-old. 

Happy Friday ya’ll!

P.S. Dandelions aren’t just weed, they’re pioneer plants that heal compacted soil, feed pollinators early in spring, and every part of them is edible and medicinal.

👋 Know a small biz owner who’s thinking of selling in the next 5 years? Hit me up—I’d love to connect.