- June 8, 2018 at 1:45 pm #198159
I am trying to fill out and work through the PDF calculation form provided by this site and I have a question about how it calculates the SDE. When I enter my salary, for some reason it seems to be doubling the number to calculate my SDE. Am I doing something wrong? My understanding is that the salary plus add backs are combined to make the SDE but not multiplied. Please help!June 8, 2018 at 1:52 pm #202309
Dock David TreeceModerator
Thank you for your question. It sounds like you’re using this calculator we provided, but here’s the link just in case you found an old version floating around: https://fitsmallbusiness.com/wp-content/uploads/2017/08/Calculating-Your-Business-Value-3.pdf Much of the methodology of the calculator is explained in the later pages of the PDF, which may also be helpful.
Our calculator divides various line items into certain sections. It sounds like the issue you’re encountering is that Owner Salary is actually included as part of the Add Backs. Once you add in owner salary, perks, family salaries, and other items, the calculator should automatically add those items to come up with Total Add Backs. Total Add Backs are then multiplied by the SDE multiplier (based on your business revenue and expenses) to get your total SDE.
You can read more about how to value a business in our Ultimate Guide to Business Valuation here: https://fitsmallbusiness.com/how-to-value-a-business/
Hope this helps!