Can I use my industry's rules of thumb to set a price, or is that risky?

You can use an industry rule of thumb as a rough starting point for your own thinking, but relying on one to actually set your asking price is genuinely risky, and buyers' advisors won't treat it as a substitute for a real valuation. Rules of thumb are, by design, generic — built from averages across many businesses — and they say nothing about your specific customer concentration, how dependent the business is on you personally, the state of your contracts and lease, or your particular financial trends, all of which materially affect what your business is actually worth.

The trap is anchoring on a number from a rule of thumb and then feeling like any professional valuation that comes in differently must be wrong. It's usually the opposite: a rule of thumb is a shortcut precisely because it ignores the details that make your business different from the average business it was built from.

If you want a genuine starting point, a proper valuation or a business broker's read on your specific business, informed by your actual financials and current market conditions, will serve you far better than an industry rule of thumb. A business lawyer or accountant can help you understand what actually drives your business's value before you anchor on any single number.