How to value a trade business (without overthinking it)

Most owners massively under- or over-estimate what their business is worth, and both cost money. Price it too high and it sits unsold while buyers scroll past. Price it too low and you hand a stranger years of your work for free. The good news: valuing a trade business is far simpler than the internet makes it look. Here is the version you actually need.

Start with profit, not revenue

Revenue is vanity. A plumbing business turning over $2m but keeping $80k is worth far less than one turning over $700k and keeping $250k. Buyers pay for profit - specifically the money the business reliably puts in the owner's pocket each year.

The number to find is often called SDE (Seller's Discretionary Earnings): your net profit, plus the salary you pay yourself, plus any personal expenses run through the business, plus one-off costs that a new owner would not repeat. That adjusted figure is what a valuation is built on.

Apply a profit multiple

Trade and blue-collar businesses typically sell for somewhere between 2x and 5x that adjusted annual profit. Where you land inside that range is the whole game:

• Lower (around 2x): small, owner-dependent businesses where the work stops if you stop. A one-van operation built around your name.
• Higher (4x to 5x+): businesses that run without the owner - a manager, trained crews, recurring contracts and clean books.

So a business with $300k of adjusted profit is roughly a $600k business if it is owner-dependent, and closer to $1.2m-$1.5m if it runs on systems and recurring revenue. Same profit, more than double the price. That gap is where the real money is.

What moves the multiple up

If you want a higher number, this is your checklist:

• Recurring revenue. Service plans, maintenance agreements and repeat contracts are the single biggest lever. Predictable income de-risks the purchase, and buyers pay a premium for it.
• Owner independence. If you can take a month off and the business runs, it is worth more. A manager or crew leaders in place is worth real money at sale.
• Clean, documented financials. Three years of tidy accounts beats a shoebox of receipts every time. See our guide on getting your books sale-ready.
• A diversified customer base. If one client is 40% of revenue, that is a risk buyers discount for.
• Trained, retained staff and included equipment. A buyer is purchasing capability, not just a customer list.

What drags it down

• The business is you - all the relationships, all the quoting, all the knowledge in your head.
• Lumpy, project-based income with no forward order book.
• Messy books, cash jobs that can't be proven, or aggressive tax minimisation that hides the real profit.
• Heavy reliance on one or two customers or one referral source.

A quick worked example

Say you run a landscaping business. Net profit on the accounts is $140k. You pay yourself $70k, and there is $15k of personal vehicle and travel cost run through the business. Your adjusted profit (SDE) is roughly $225k.

Owner-dependent, no contracts: ~2.2x = roughly $495k. Recurring HOA and commercial maintenance contracts, crew leaders running the teams: ~3.8x = roughly $855k.

Nothing about the work changed. The structure did.

Get a real number in under a minute

You do not need a spreadsheet to start. Our free valuation tool gives you an instant, honest ballpark based on your profit - no sign-up needed to see the estimate. When you are ready for the real figure, we connect you with a vetted broker who confirms it properly and prices it to sell.

Thinking a year or two ahead? Every contract you win and every system you document is quietly raising your multiple. Build with the exit in mind, and one day that number is yours. When you are ready, list your business and we will take it from there.