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What is my business worth? How small businesses are valued in Australia.

By Michael White, director of AUS Brokers and a licensed business agent in Victoria. · Updated 24 September 2026

So the short answer to "what is my business worth?" is: your maintainable earnings × the multiple buyers pay for a business like yours, plus stock. This guide explains each part, how to work it out, and where owners most often get it wrong.

Why buyers price on profit, not turnover

A buyer is buying an income. What they want to know is how much the business will pay them each year and how many years it takes to earn back what they paid. That's why a café turning over $900,000 can be worth less than a cleaning business turning over $400,000: what matters is what's left after costs. (See the café, restaurant, takeaway, retail shop and cleaning or trade business guides.)

A few industries are commonly priced on revenue or recurring fees instead (accounting practices are the best-known example), but for most small businesses, profit is the starting point.

Step 1: Work out your maintainable earnings

Your tax return is designed to keep tax down, not to show a buyer what the business really earns. So the first step is to normalise the profit: start from net profit before tax and add back costs a new owner won't have.

Common add-backs

• Depreciation and amortisation: accounting entries, not cash leaving the business.
• Interest on the owner's loans: a buyer brings their own funding.
• One working owner's wage and super: see PEBITDA below.
• Personal expenses run through the business: private car costs, phones, family members paid but not working.
• One-off costs: a fit-out repair, legal costs from a dispute, a one-time equipment write-off.

Every add-back has to be something you can show a buyer on paper. Buyers and their accountants will check each one, and unsupported add-backs are the fastest way to lose a buyer's trust. Read more: Add-backs explained, with a worked example.

PEBITDA or EBITDA?

Owner-run businesses are usually measured on PEBITDA: profit before interest, tax, depreciation, amortisation and one working owner's wage. It assumes the buyer will work in the business themselves, the way most buyers of small businesses do.

If two owners work full-time, only one wage is added back. The second owner's role is a job someone will have to be paid to do. Leaving both wages out is one of the most common ways owners overstate what their business is worth.

Larger businesses run by a manager are usually measured on EBITDA, which deducts a market wage for management. That figure is lower, but the multiples paid on it are usually higher, because the buyer is buying a business that doesn't need them in it every day.

Step 2: Choose the right multiple

The multiple is how many years of maintainable earnings a buyer will pay. It changes a lot by industry and size. Small owner-operated businesses commonly sell for low single-digit multiples, while larger, managed businesses with steady earnings sell for more.

What pushes a multiple up or down

This is also why rules of thumb found online ("cafés sell for two times profit") are only a starting point. Two cafés with the same profit can sit at opposite ends of the range because of their leases alone. What is my café worth?

Step 3: Add stock at value

For businesses that carry stock (retail, hospitality, trade suppliers), the price is usually quoted as "$X plus stock at value". The stock is counted at the handover and paid for at cost on top of the price for the business. Don't include the stock in your multiple, or you'll count it twice. More on stock in our retail guide.

Step 4: Check against the market

The last test is what similar businesses in your state are asking. Look for businesses in the same industry, of a similar size and earnings, on the main business-for-sale sites.

Two cautions:

• Asking prices aren't sold prices. Listings show what sellers hope to get. Many sell for less, and some don't sell at all.
• Compare earnings, not just prices. A café asking $250,000 tells you little unless you know its profit, lease and trading hours.

A worked example

All figures are illustrative, made up for this example, and are not industry data.

A suburban café shows a net profit before tax of $62,000. The owner works in it full-time, and their partner does the books from home a few hours a week.

If buyers were paying, say, 1.5 to 2 times PEBITDA for a café like this (illustrative), the business would be worth about $200,000 to $270,000, plus stock at value. Where it lands in that range depends on the lease, the trend in earnings and what comparable cafés nearby are asking.

Notice the last line of the table: unpaid family help is a cost a buyer will have to pay for, so it comes off the earnings.

Five mistakes that make owners overprice

1. Adding back both owners' wages when both work in the business.
2. Pricing on turnover instead of profit.
3. Treating an asking price you saw online as a sale price.
4. Counting stock twice: in the price and again as stock at value.
5. Add-backs with no paperwork, especially undeclared cash takings. Buyers won't pay for income they can't verify, and banks won't lend on it.

Do I need a formal valuation?

If you're deciding on an asking price, an indicative appraisal is usually enough. You need a formal valuation from a qualified valuer when the figure has to stand up to someone else: a bank, a family law settlement, the ATO (for example, capital gains tax market value), a shareholder dispute or a court. Appraisal vs formal valuation: which do you need? Tried an online calculator? What a business valuation calculator can and can't tell you.

Planning to sell it yourself? See How to sell your business yourself in Australia.

Guides by business type: cafés, restaurants, takeaways, retail shops, cleaning and trade businesses, hair and beauty salons, mechanic workshops and gyms and fitness studios.

Frequently asked questions

General information only, not financial, tax or legal advice. Figures in the worked example are illustrative.