How much is my business worth? A plain-English guide for Australian owners
The question every owner asks. What actually drives the value of a small service business, and how to get a realistic answer without paying for a full valuation straight away.
By This article covers financial and tax matters. It's general information to help you ask better questions, not advice for your situation. Velaro isn't a law firm, registered tax agent or licensed financial adviser. Please check anything important with a qualified adviser before you act.
In short
- Value is driven by reliable profit, adjusted for risk, not turnover.
- Rules of thumb and online multiples mislead more often than they help.
- Your accountant is the right first step for a realistic range.
It's the first question most owners ask, and often the one they're most nervous about. Online calculators and rules of thumb give wildly different answers. The truth is that a business is worth what a buyer will pay for the profit it reliably produces, adjusted for how risky that profit looks. Here's how to think about it.
Start with profit, not turnover
Two businesses turning over the same amount can be worth very different sums. What matters is the profit left after running costs, adjusted for anything unusual, such as one-off expenses or personal costs paid through the business.
Many buyers also deduct a fair wage for the work the owner does, because someone will have to do it after the sale.
Then look at risk
The more predictable the profit, the more a buyer will pay for it. Recurring contracts, a spread of customers, a capable team, organised records and a secure lease all reduce risk.
Heavy reliance on the owner, one or two big customers, ageing equipment or a short lease all increase it.
Why rules of thumb mislead
You'll hear that businesses sell for a certain multiple of profit. There are rough ranges by size and industry, but the spread is wide and depends on the factors above.
Treat any single number from a friend, a website or a first conversation with caution.
Free tool
Work out your walk-away number
Two minutes, private, nothing stored.
What's usually included
A price normally covers the goodwill, plant and equipment needed to run the business. Stock is often valued separately at completion.
Cash, debtors and creditors are commonly kept by the seller. Clarify what's in and out before comparing any numbers.
How to get a realistic view
Start with your accountant, who knows your numbers. They can prepare adjusted profit figures and a range.
If you want more certainty, an independent valuer can provide a formal report.
If a buyer gives you a number, ask how they reached it and what assumptions sit behind it. A fair buyer will explain it openly.
Your checklist
What to do next
- Pull three years of profit and loss statements
- List one-off and personal expenses
- Estimate a fair wage for your own role
- Note what makes your profit more or less predictable
- Ask your accountant for a value range
- Clarify what a price would include
Example
An owner expected a figure based on a multiple of turnover he'd heard at a trade event. His accountant's analysis, based on adjusted profit and the business's heavy reliance on him, produced a lower range. He spent a year building up his supervisor's role before going to market, which improved both the range and his confidence in it.
An illustrative example, not a real client or transaction.
Questions owners ask
Is there a formula for valuing my business?+
Not a single one. Most approaches start with adjusted profit and apply a multiple that reflects risk, but the inputs matter more than the formula.
Should I pay for a formal valuation?+
It can be worthwhile before a sale or for tax, family or partnership reasons. Your accountant's view is often a sensible first step.
Will Velaro tell me what my business is worth?+
If we get to a proposal, we'll explain exactly how we reached any number so your adviser can test it. We're the buyer, though, so please also get an independent view.
Sources and further reading
Information checked against these sources as at October 2026. Rules and thresholds can change, so check the current position with your adviser.
Important
This article is general information only. It doesn't take your personal circumstances into account and isn't financial, legal, tax, employment or valuation advice. Velaro Group is a buyer of businesses. It isn't a business broker, licensed financial adviser, registered tax agent or law firm, and it doesn't act for sellers. Please get advice from your own accountant, solicitor or financial adviser before making any decision. Read the full disclaimer.
Keep reading