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Business Valuation Worksheet 🫰 💵 

STEP 1: DEFINE YOUR EARNINGS

Let's start with understanding your business's earnings. Please fill out the following table using data from your financial statements for the last 3 to 5 years. If you don't have this data, try to estimate the values as accurately as possible.

Calculate Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA)

EBITDA represents the profitability of a business before accounting for factors such as interest, taxes, and depreciation, which can vary significantly between businesses.

• Total Revenue (Last 12 months): $____________________________

• - Cost of Goods Sold (COGS): $____________________________

• = Gross Profit: $____________________________

• - Operating Expenses (excluding interest, taxes, depreciation, and amortization): $____________________________

• = EBITDA: $____________________________

Once you've filled out the table, calculate your average annual earnings across these years and write down the value here:

Average Annual Earnings Growth Rate (%): _______

Forecasted Annual Earnings ($USD): Current Year * Growth Rate = _______

STEP 2: DETERMINE YOUR EARNINGS MULTIPLIER

Here's a simple matrix that can provide a starting point to help determine an approximate earnings multiplier based on the industry and size of a business. However, keep in mind that many factors can influence this number, including growth rates, profitability, competitive advantage, etc. This table should be used as a general guideline and it is highly recommended to consult with a professional for a more accurate assessment.

Please note, these are just rough averages and every individual business will have its own unique circumstances that could cause the earnings multiplier to be higher or lower. In addition, the range provided shows the variability that could be seen due to these individual circumstances.

Remember, business valuation is more of an art than a science. No two businesses are the same, and various factors can drastically change a business's value. This table is a good starting point, but professional assistance is recommended for an accurate valuation.

Now it's time to choose an earnings multiplier that best represents your business. Refer back to the Earnings Multiplier Matrix we provided to help you determine your base earnings multiplier. Fill it out here:

Base Earnings Multiplier: _______

STEP 3: CONDUCT AN EQUITY RISK ASSESSMENT

Next, we'll assess your business's operational equity risk. Using our Operational Equity Risk Assessment Matrix, please score each factor from 0 (very high risk) to 5 (very low risk) and note your scores in the following table:

Once completed, tally up your total score:

Total Score: _______

STEP 4: CALCULATE YOUR RISK RATIO

Your risk ratio represents the operational risks in your business. Calculate your Risk Ratio as follows:

Risk Ratio = Your Total Score / 80

Write down your Risk Ratio here:

Risk Ratio: _______

STEP 5: ADJUST YOUR EARNINGS MULTIPLIER

We'll now adjust your earnings multiplier using the risk ratio you calculated:

Adjusted Multiplier = Base Multiplier * Risk Ratio

Write down your Adjusted Multiplier here:

Adjusted Multiplier: _______

STEP 6: ESTIMATE YOUR BUSINESS VALUE

We're finally here! Use your average annual earnings and your adjusted multiplier to estimate the value of your business:

Business Value = Average Annual Earnings * Adjusted Multiplier

Write down your Estimated Business Value here:

Estimated Business Value ($USD): _______

IMPORTANT: This worksheet is intended to help you think strategically about ways to improve your business's value. The figures generated by this tool are estimates and should not be taken as definite or guaranteed outcomes. Always consult with a business advisor or other professional before making significant changes to your business strategy.

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Keep it simple.

- The Simple Profits Team