The owner's glossary

Expenses added back to profit when calculating SDE because a new owner would not incur them: owner perks, one-time costs, and discretionary spending. Only provable add-backs count.

The two legal shapes of a business sale: buying the assets (equipment, brand, goodwill) out of the company, or buying the company itself, shares, history, and liabilities included.

Revenue divided by number of transactions: what the typical sale is worth. One of the three levers (traffic, conversion, ticket) every revenue plan pulls.

The sales level at which revenue exactly covers all costs. Below it every day loses money; above it, contribution turns into profit.

The actual movement of money in and out of the business over time. Profit is an opinion about a period; cash is a fact about today, and businesses die of cash, not of accounting.

The share of recurring customers who leave in a period. The number that decides whether a membership base compounds or quietly dissolves.

How much of the revenue depends on a few customers. High concentration is priced as risk by buyers: if two clients are 40 percent of revenue, their goodbye is the buyer's problem.

The buyer's verification phase before completing a purchase: books, contracts, licences, staff, and claims all get checked against evidence. Deals die here more than anywhere else.

A sale structure where part of the price is paid later, conditional on the business hitting agreed performance targets after the handover.

Earnings Before Interest, Taxes, Depreciation, and Amortisation: the profit measure buyers use for businesses that run under professional management rather than an owner-operator.

The value of a business as a whole operating machine, independent of how it is financed. For an owner, the north-star number that daily decisions either build or erode.

How prepared a business is to be sold or handed over at full value: provable books, owner independence, and a transferable setup, measured before anyone is looking.

The part of a business's price above the value of its tangible assets: reputation, customer habits, brand, and the expectation that profits continue.

Revenue minus the direct cost of delivering it, as a percentage of revenue. The number that says whether the work you sold was worth doing.

A written, mostly non-binding statement of a buyer's proposed price and terms, which opens due diligence and usually locks the seller into an exclusivity period.

What is left of revenue after ALL costs, as a percentage. The business's true take-home efficiency, and the number tax returns and buyers ultimately read.

The share of booked appointments where the customer simply does not arrive. A silent tax on every appointment business: paid capacity, zero revenue.

The degree to which a business needs its owner personally in order to operate. The single biggest discount factor on small-business sale prices.

Income that repeats by default (memberships, retainers, subscriptions) rather than being re-won each time. Priced above one-off revenue by buyers because it transfers.

The seller acting as the buyer's lender for part of the price, paid over time from the business's cash flow. Very common in small-business sales.

The total annual financial benefit one owner-operator takes from a business: pre-tax profit plus owner pay plus add-backs. The profit measure behind most small-business sale prices.

Whether a business's value can actually move to a new owner: the lease, licences, brand, systems, customer relationships, and data. Untransferable value is unpaid value.

The share of sellable capacity actually sold: chair hours, room hours, tables, practitioner time. Empty capacity is a cost that never sends an invoice.

The number a business's earnings are multiplied by to reach a price. Owner-operated businesses commonly trade in a rough range of 1.5x to 3.5x SDE, with risk factors deciding where in the range.