July 20, 2026
Seller Profit vs Business Value Worksheet
A plain-English worksheet that helps business owners turn yearly take-home profit into a rough sale-value range before they talk to buyers.
Most business owners ask one question first: "What is my business worth?"
The honest answer starts with a simpler number: your yearly take-home profit. Brokers often call this SDE, which means seller discretionary earnings. In plain English, it is the profit the business produces for one working owner after reasonable add-backs.
This worksheet helps you organize that number before you run a valuation or talk to a buyer.
Step 1: Start With Last Year's Profit
Use the profit number from your profit and loss statement, tax return, or accounting system.
Write it down:
Last year's reported profit: $__________
If you are not sure which number to use, start with net income. You can clean it up later.
Step 2: Add Back Owner Benefits
Some expenses are real for taxes but may not continue after a buyer takes over. These are often called add-backs. In plain English, they are business-paid costs that mostly benefited the owner or were one-time expenses.
Common add-backs:
- Owner salary above or below a normal manager salary.
- Owner health insurance or personal vehicle costs.
- One-time legal, repair, moving, or cleanup costs.
- Family payroll that will not continue under a buyer.
- Travel, meals, or subscriptions that are not needed to operate the business.
Write down only items you can explain clearly:
Total reasonable add-backs: $__________
Step 3: Subtract Problems a Buyer Will Notice
Buyers lower value when a business has risk. Name the risk before they do.
Common value reducers:
- One customer makes up too much revenue.
- The owner does most sales or operations personally.
- Books are not clean.
- Key employees may leave.
- Revenue declined recently.
- Equipment, software, or leases need replacement soon.
Estimate the yearly cost or discount:
Risk adjustment: $__________
Step 4: Estimate Yearly Take-Home Profit
Use this simple math:
Reported profit + reasonable add-backs - risk adjustment = yearly take-home profit
Example:
$180,000 profit + $40,000 add-backs - $20,000 risk adjustment = $200,000 yearly take-home profit
Your number:
$__________ + $__________ - $__________ = $__________
Step 5: Turn Profit Into a Rough Value Range
Small businesses often sell for a multiple of yearly take-home profit. A multiple is just a shortcut buyers use to compare businesses.
For an early rough range, use three cases:
| Case | Plain-English meaning | Math | |---|---|---| | Low | Buyer sees risk or weak growth | Yearly take-home profit x 2 | | Middle | Stable business, normal buyer interest | Yearly take-home profit x 3 | | High | Strong systems, clean books, growth path | Yearly take-home profit x 4 |
Your rough range:
Low: $__________ x 2 = $__________
Middle: $__________ x 3 = $__________
High: $__________ x 4 = $__________
This is not a formal appraisal, legal advice, tax advice, or a promise that a buyer will pay that amount. It is a starting point so you can make a better next decision.
Step 6: Decide What to Fix First
If your range is lower than expected, do not panic. Many value problems are fixable.
Best first fixes:
- Clean up the last 24 months of financial statements.
- Reduce owner dependence by documenting key work.
- Write down why revenue changed.
- List the top customers and how long they have stayed.
- Build a simple buyer summary that does not reveal private details publicly.
Next Step
Run a free DealPilot estimate to turn your worksheet into a more organized sale-readiness view.