Thinking about selling your small business? Whether you're moving on to your next venture or simply ready for a change, knowing how to properly value your business is key to a smooth sale (and a profitable one). But here’s the thing: many Australian small business owners either undervalue or overvalue their business, which can turn off potential buyers or leave money on the table.
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So, how do you figure out what your business is really worth?
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Let’s break it down with five things you absolutely need to keep in mind when valuing your business, plus some common traps to steer clear of.

Before diving into numbers, get clear on what you're including in the sale. Is it just the assets? Or are you selling the full business as a going concern: including goodwill, customer lists, brand, contracts, systems, and IP?
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A business with solid recurring revenue, strong customer relationships, and documented systems will typically be worth more than one that’s just a set of tools or stock.
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💡Pro Tip: Buyers aren’t just buying your gear - they’re buying the potential future earnings of the business. Highlight your business model, not just the balance sheet.

Many small business owners focus on turnover (revenue), but what really matters is profit — specifically, Seller’s Discretionary Earnings (SDE). This includes net profit plus any benefits you as the Owner draw from the business (like your salary, perks, and one-off expenses).

Once you have your SDE, a valuation multiple (typically 1–3x for small businesses) is applied, depending on risk, industry, and business strength.

Example: If your SDE is $150,000 and you apply a 2.5x multiple, your business could be worth around $375,000.

Every industry has its own “norms” when it comes to valuation. A café might be valued differently than an online retailer or a plumbing business (even if they earn the same profit).

Check what similar businesses are selling for in your area or sector. Look at actual listings on platforms like Seek Business, Bsale, or ForSalebyOwner to get a sense of market expectations.

✏️Note: Your unique selling points, like location, niche market, or a strong brand, can push your value above the average.

Buyers want confidence. If your financials are a mess or don’t match your story, they’ll walk away - or offer way less.
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Make sure your accounts are up to date, expenses are properly categorised, and you can clearly show historical performance and trends. Ideally, prepare at least 3 years of financials and a clear breakdown of Owner’s earnings.
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💡Tip: Work with your accountant early in the process to tidy things up. Clean books can add real value.

Don't underestimate the intangible assets that make your business appealing - things like reputation, location, loyal staff, customer reviews, supplier relationships, and growth opportunities.
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A buyer might pay a premium for a business that’s ready to scale, even if it hasn’t yet.

🤔Think about it: If a buyer sees untapped potential that you haven't capitalised on, that can add to the valuation.

Even experienced business owners can slip up when valuing their business. Here are the big ones to watch out for:

Selling your business is a big deal, and a good valuation sets the tone for the entire process. If you’re unsure, it’s worth getting a professional valuation or chatting to a business broker to help you get it right. After all, this isn’t just a number - it’s the value of years of hard work.