Determine the purpose of the valuation
Gather at least 3 years of financial statements
Normalize earnings by adjusting owner salary, one-time expenses, and non-business items
Calculate revenue, gross profit, EBITDA, and net income
Review assets and liabilities
Assess cash flow and working capital
Compare with industry valuation multiples
Use the earnings approach
Use the asset-based approach
Use the market approach
Estimate future earnings or cash flow
Apply a discount rate or capitalization rate
Adjust for business size, risk, and growth potential
Consider customer concentration and supplier dependence
Evaluate management strength and transferability
Review legal, tax, and operational risks
Factor in intangible assets such as brand, contracts, and goodwill
Compare with recent sales of similar businesses
Reconcile results from multiple valuation methods
Document assumptions and final valuation range