How to Value Your Small Business for Net Worth

If you own a small business, there's a good chance it's the most valuable thing you own — and also the thing you're least likely to include when you calculate your net worth. That's a problem.

Most people track their bank accounts, retirement funds, maybe even their home equity. But the business they've spent years building? It just... sits there, unaccounted for. Either because they don't know how to value it, or because the whole idea feels too squishy and subjective.

Here's the thing: you don't need a perfect number. You need a reasonable estimate that you revisit over time. Let's walk through how to get one.

Why Your Business Value Matters for Net Worth

When you leave your business out of your net worth calculation, you're flying blind. You might think you're behind financially when you're actually in great shape — or you might feel wealthier than you are because you're over-relying on a business that hasn't been stress-tested.

Including your business in your net worth gives you a more honest picture of where you stand. It also helps you plan better. Thinking about retirement? Considering selling? Want to know if that side hustle you started is actually building real wealth? You need a number to work with.

It doesn't have to be exact. It just has to be informed.

Three Ways to Estimate Your Business Value

There's no single "right" way to value a small business, but there are three approaches that cover most situations. Pick the one that fits your business best — or use two of them and see where they land.

Revenue and Earnings Multiples

This is the most common method for small businesses. You take a financial metric — usually annual revenue or seller's discretionary earnings (SDE) — and multiply it by a number that reflects what buyers typically pay in your industry.

SDE is your net profit plus your own salary plus any personal expenses you run through the business. It represents the total financial benefit of owning the company.

Here's what typical multiples look like across industries:

• SaaS businesses: 3x–10x annual revenue, depending on growth rate and churn
• Professional services (agencies, consulting): 1x–3x SDE
• Retail and e-commerce: 2x–4x SDE
• Restaurants and food service: 1.5x–3x SDE
• Trades (plumbing, HVAC, electrical): 2x–4x SDE

So if you run a consulting firm with $150,000 in SDE and the typical multiple is 2x, your rough valuation is $300,000.

These ranges are wide because specifics matter — recurring revenue, customer concentration, growth trends, and how dependent the business is on you personally all shift the number up or down.

Asset-Based Valuation

This approach adds up everything the business owns (equipment, inventory, real estate, cash, receivables) and subtracts what it owes (loans, payables, leases). What's left is the net asset value.

Asset-based valuation works best for businesses that are capital-heavy — think manufacturing, construction, or real estate holding companies. It's less useful for service businesses where the value lives in client relationships, brand, and expertise rather than physical stuff.

It's also a useful sanity check. If your earnings multiple says your business is worth $500,000 but the assets alone are worth $600,000, the multiple is probably too low.

Discounted Cash Flow (Simplified)

DCF is the method that makes people's eyes glaze over, but the core idea is simple: your business is worth the total of all the cash it will generate in the future, adjusted for the fact that money later is worth less than money now.

A simplified version for small business owners:

• Estimate your annual free cash flow (profit after reinvestment)
• Project it forward 3–5 years with a realistic growth rate
• Discount those future cash flows back to today using a rate of 15–25% (this accounts for the risk of owning a small business)
• Add up those discounted values

If your business generates $100,000 per year in free cash flow and you discount at 20% with no growth, the rough value is about $500,000 ($100K ÷ 0.20). Growth assumptions and the discount rate you pick swing this number a lot, so be honest with yourself.

When to Get a Professional Valuation

A back-of-the-napkin estimate is fine for tracking your net worth. But there are situations where you should spend the money on a professional appraisal:

• You're selling the business — buyers will do their own analysis, and you need to negotiate from a solid position
• You're bringing on a partner or investor — everyone needs to agree on what the business is worth today
• Divorce or estate planning — legal situations demand defensible numbers
• The business is worth more than 50% of your total net worth — the stakes are high enough to justify precision

A formal business valuation from a certified appraiser typically costs $3,000–$10,000 depending on complexity. For businesses under $1M in value, a broker's opinion of value (usually $1,000–$2,000) can be a good middle ground.

How to Track Your Business Value Over Time

The real power of valuing your business isn't a one-time number — it's watching how that number changes quarter over quarter and year over year.

Here's a practical approach:

• Pick your method and stick with it for consistency
• Reassess quarterly using updated financials
• Write down your assumptions so you remember why you picked a specific multiple or growth rate
• Adjust when big things change — new recurring revenue streams, losing a major client, or a market shift

Nova lets you add your business as a manual asset and update its estimated value as the business grows. Explore Nova's features to see how manual assets work alongside your connected accounts — you'll always have an accurate snapshot of your full financial picture.

Your Next Steps

Don't overthink this. Here's what to do today:

• Pull your last 12 months of financials — revenue, profit, and owner compensation
• Calculate your SDE — net profit + your salary + personal expenses through the business
• Pick an industry multiple from the ranges above and multiply
• Add it to your net worth tracker — use our free net worth calculator or Nova to include it. Even a rough number is better than zero
• Set a calendar reminder to revisit in 90 days

Your business is probably worth more than you think. It deserves to be counted.