Most people who start a trade business are thinking about monthly income. What they're not thinking about, and what changed everything for me, is what the business is worth the day they decide to walk away.
That number is usually bigger than people expect. It's also more within your control than you'd think.
How these businesses get priced
Small trade businesses sell on a multiple of earnings. Which earnings figure gets used depends on your size.
If you're a smaller owner-operated shop, buyers price off Seller's Discretionary Earnings — essentially your profit plus your own compensation and personal add-backs. Deals under roughly $500,000 of earnings typically transact on SDE at 2x to 5x.
Once you're bigger and the business runs without you daily, buyers switch to EBITDA. Buyers under $750k underwrite on SDE; above $1M they underwrite on EBITDA. That switch is a big deal — moving from SDE pricing to EBITDA pricing is the single largest valuation step-up moment there is.
The more the business runs without you, the more it's worth. Not a little more. Categorically more.
What the ranges actually look like
Home services businesses generally land in the 4x to 6x EBITDA band. Single-location, owner-operated shops with no recurring revenue trade at the bottom — around 3.5x to 4.5x. Multi-location operations with real branding and 50%+ maintenance contracts clear 6x and sometimes higher.
By trade, the spread is real:
HVAC commands the premium. Owner-operator single-truck operations run 3x to 5.5x SDE, while larger PE-ready companies above $1M EBITDA fetch 5x to 12x. Recurring service agreements are why.
Plumbing is strong for similar reasons, licensing and repeat work.
Landscaping sits lower. It trades around 2x to 4x SDE depending on size and operation.
Painting, where I live, is in the same neighborhood as most non-licensed trade multiples, with the number driven almost entirely by how professionalized the operation is.
What actually moves your number
Here's the part worth internalizing early, because these are choices you make from day one.
Owner dependency is the killer. A business that can't run without the owner is functionally unsellable above 1.5x to 2x SDE, regardless of industry. If you're the estimator, the scheduler, and the quality control, you haven't built a company. You've built a job with extra paperwork.
Recurring revenue is the multiplier. Contract work can add one to two full turns to your multiple. Customer concentration above 15% compresses it.
Clean books matter more than people believe. Most small businesses that go to market never sell, and messy financials are near the top of the reason list. The work you do keeping clean records in year one is what makes year five liquid.
My numbers
I don't want to talk in ranges without showing you a real one.
My CertaPro painting franchise did $242k in SDE in 2022, $308k in 2023, and $425k through the first nine months of 2024 when I listed it. I got four offers. Three came in at $1.46 million, which is where I closed.
Do the math and that's roughly 3.9x over the 3-year average SDE— right in the upper tier you'd expect for a well-run, growing painting company. Not a headline multiple. But I put in $88,000 and three years, and it changed my family's financial picture.
One thing worth knowing about the current market
The multiples above are firmer than they were a decade ago, largely because private equity has moved into home services in a serious way. Roll-up strategies are driving consolidation across HVAC, plumbing, roofing, pest control, electrical, and landscaping. Blackstone bought a residential HVAC, plumbing, and electrical platform in 2025 at an implied multiple in the teens.
That's not your reality at the small end, and you shouldn't plan around it. But it tells you where the demand is coming from, and who might eventually be buying what you build.
Interest rates cut the other direction. When a buyer's SBA loan costs 11.5% instead of the 6% they'd have paid in 2021, their annual debt service on a $425,000 landscaping deal jumps by roughly $15,000 a year, which makes buyers more cautious and more likely to negotiate.
The takeaway
A paycheck is worth zero when you stop showing up. A trade business is worth a multiple of what it earns, but only if you build it so it doesn't depend on you.
That's the whole game. Systems instead of heroics. Recurring revenue instead of one-off jobs. Clean books from day one. A team that can run a job without you on site.
Do that, and you're not just replacing your income. You're building something with a price tag on it.
Until next time,
Zac
P.S. Hit reply anytime. If you are considering a leap into entrepreneurship I would love to hear about it.