What exactly is Seller Discretionary Earnings or SDE?

Sellers Discretionary Earnings (or SDE) is a figure often used in valuations and acquisitions of small businesses. SDE often goes by other names:

DCF: Discretionary Cash Flow
SDI: Seller’s Discretionary Income
SDCF: Seller’s Discretionary Cash Flow
ODI: Owner’s Discretionary Income
ODCF: Owner’s Discretionary Cash Flow

But what exactly is it and how do you calculate it? Why is it important?

In this video, Mark Daoust answers the most common questions that come up when it comes to understanding and measuring Seller’s Discretionary Earnings (SDE).

SDE is potentially the most misunderstood metric in e-commerce. It's more complicated than just cash flow or profits or income, and while it may at first be a confusing concept for many business owners, accurately calculating your SDE is critical when it comes to valuing your online business.

Watch this video to learn:
- The definition of SDE and what it entails,
- Tactics to find the numbers behind your SDE
- Examples of how accurately calculating SDE can affect your business in the long term.

If you’re new to the prospect of buying and selling, Quiet Light is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.

How much is your online business worth? Reach out to us for a free and individually-tailored valuation of your online business. Let’s get you started with the right mindset towards achieving significant growth in your business, and turn your greatest asset into a vehicle for your personal and financial freedom.

We believe in buying businesses, not starting them. There's a lot of risk involved when starting a business from scratch - you have a lot to worry about and most people don't enjoy failure. With the availability of SBA financing, you might find it easier to buy a business than you thought. Visit our listings page to see what businesses we currently have for sale.

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#quietlight, #sellersdiscretionaryearnings, #sde, #amazonfba, #fbametrics, #entrepreneurtips,

0:31 - Important metrics for you to understand. Seller & Buyer
0:53 - What exactly are seller discretionary earnings
1:01 - Technical Definition of SDE
1:13 - Breaking down SDE
1:39 - True one-time expenses
1:50 - The goal of the discretionary earnings calculation

[TV-obif]

Music is distracting. But I like the info

[evellinlimapmuacademy]

Hi i have a waxing business. Do i put the money the business makes an year including what i pay to my employees? Or i subtract the amount that goes to my employees ?

[RamsayboltonSnow]

So? Long story short the discretionary earnings for a business is what would be for an owner to profit bottom line? Like if the DE are 126, 000$. Is that a close figure give or take what an owner would profit?

[TLH]

I found this video informative but I had to rewatch it three times to pull out the info b/c the background music so loud and distracting.

[samuelebelhar]

So, after the physical year has ended. I can use these earning for whatever I choose? Or how does that work?

[Murciful]

Would pay money to have the background music off