Whether a sole trader or FTSE 100 company all businesses are essentially valued on the same principles. The enterprise value of your business will be determined by the value and likelihood a potential buyer places on the future cash earnings of your business today. This may also include how much an investor can sell it for in the future.
Valuing a company is more of an art than a science and will ultimately depend on peer valuations, comparable transactions, transaction structure and is generally represented as a multiple of earnings or several fundamentals.
The multiple is a function of many things: comparable company sales, industry, earnings stability, goodwill, intellectual property, type of buyer and the potential to scale your business.
The proposed transaction structure can then take many different forms. Are you buying/selling part or whole of the business? Are you purchasing/selling the assets only or the company itself? Most importantly of all, are you seeking a silent partner or an active investor?
You should also consider the distinction between financial and trade buyers as well as upfront or deferred consideration. Tax and legal issues must also be considered.