Service Business Valuation Calculator
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This service business valuation calculator allows you to estimate the financial worth or value of your service business by inputting key metrics like annual revenue, number of employees, company valuation multiplier and cost of sales.
What is a service business valuation calculator?
A service business valuation calculator is an online tool used to estimate the financial worth or value of a business. To get results, you’ll need to add key details like annual revenue, number of employees, average revenue per customer, and growth rate. The calculator will look at the overall value of your business based on these key financial metrics and performance indicators.
Who uses a service business valuation calculator?
Many people in the service industry use business valuation calculators. Owners plan strategies, analysts evaluate viability, investors assess opportunities, and lenders determine loan terms using the calculator. It is an essential aid for optimizing your overall business value.
What information is included in a business valuation calculator?
To use a business valuation calculator, you’ll need to have the following information on hand:
1. Annual Revenue: Total revenue generated by the business in a year.
2. Cost of Sales Last Year: Total expenses directly associated with the production of goods sold in the previous year.
3. Total Value of Company’s Assets: The combined value of all assets owned by the business.
4. Company Valuation Multiplier: Helps estimate the value of your company based on Net Profit.
5. How many technicians work at your company?
6. How many office staff work at your company?
7. Average Monthly Salary of a Technician
8. Average Monthly Salary of an Office Staff
9. Overhead Expenses: Total ongoing business expenses not directly tied to creating a product or service.
Formulas Used in the Service Business Calculator:
1. Gross Profit
GP = AR − COS
Where:
– GP is the Gross Profit.
– AR is Annual Revenue.
– COS is Cost of Sales.
2. Net Profit
Net Profit = Gross Profit – (Overhead Expenses + Cost of Technician + Cost of Office Staff)
where:
Cost of Technician = (How many technicians work at your company * Avg. monthly salary of a technician) * 12
Cost of Technician = (How many office staff work at your company * Avg. monthly Salary of an office staff) * 12
3. Estimated Business Valuation
Estimated Company Value = (Net Profit + Total value of company’s assets)* Company valuation multiplier
Example of How to Calculate Business Valuation
Annual Revenue (AR): $1,000,000
Cost of Sales Last Year (COS): $400,000
Overhead Expenses (OE): $200,000
Total Value of Company’s Assets (VA): $300,000
Company valuation multiplier (M): 5X
How many technicians work at your company: 5
Avg. monthly salary of a technician: $2,000
How many office staff work at your company: 5
Avg. monthly Salary of an office staff: $1,000
Calculations:
1. Gross Profit (GP)
GP = $1,000,000 – $400,000 = $600,000
2. Net Profit
Net Profit = $600,000 – ($200,000 + $120,000 + $60,000) = $220,000
3. Estimated Business Value
Estimated Business Value = ($220,000 + $300,000) * 5 = $2,600,000