- 1). Determine the value of the land that you want to sell with the business. This can be accomplished by hiring a real estate appraiser to come up with the value. The real estate appraiser can compare your property to other similar properties that have recently sold. This will give you an idea of what you should ask for the land part of your transaction.
- 2). Calculate the seller's discretionary earnings for your small business. The seller's discretionary earnings is a number that includes the net profit of the business as well as the salary that you pay yourself as the business owner. By adding these two numbers together, you give the buyer an idea of how much money he can expect once all of the bills are paid. This is a metric that is commonly used with businesses that have less than $1 million in sales.
- 3). Calculate the EBITDA of your small business if it makes somewhere between $1 million and $30 million. EBITDA stands for earnings before interest, taxes, depreciation and amortization. This information can be found on your balance sheet, in most cases.
- 4). Multiply the number that you calculated by the appropriate multiple. If you used the seller's discretionary earnings number, you can typically multiply that by somewhere between one and three times to get a selling price for your business. If you have a bigger business that used the EBITDA calculation, you can multiply that by three to five times to get selling price for your business.
- 5). Add the price of the land that you obtained real estate appraiser to the amount that you calculated in Step 4. When you add these two values together, it should give you an idea of what your small business is worth, including the land that it owns. While you may not be able to get as much work, this gives you a good place to start when listing your property.
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