How Much Is My Business Worth? A Plain-English Guide for Australian Owners

In The Subscription Playbook I tell the story of selling my first business. It wasn't really a sale. It was an exit with my dignity intact. Every dollar we earned was a one-off project, and when it came time to get out, there wasn't much for a buyer to buy.

That lesson stuck. What your business is worth isn't decided on the day you sell. It's decided by the years before.

This guide explains how Australian small businesses are valued, as at October 2026, and what you can do about it. It's general information, not a valuation. For a formal figure, speak to a qualified valuer or accountant. My colleagues at BPAG Accountants do this work every week.

The three ways businesses are valued

Industry rules of thumb, like a percentage of annual fees for an accounting practice, are really shortcuts to one of these.

If you don't run a software company, assume the first method applies to you.

Step 1: Work out your maintainable earnings

Maintainable earnings are the profit a new owner could reasonably expect to keep making. Buyers and valuers usually start from EBITDA or net profit and adjust it:

• Add back one-offs. A fit-out, a legal dispute, a one-time consultant.
• Add back personal expenses run through the business. Be honest. Buyers will check.
• Deduct a fair wage for your work. If you work 50 hours a week and pay yourself nothing, a buyer will have to pay someone to do that. Deduct a market wage for the role.
• Normalise rent and related-party costs to market rates.
• Look at the trend. A weighted average of the last two or three years is common, especially if profit is lumpy.

Here's a simple example for a business with A$300,000 of net profit:

That A$93,000 gap between "profit" and "maintainable earnings" is where most valuation disappointments start.

Step 2: Choose the multiple

The multiple is how many years of maintainable earnings a buyer is prepared to pay up front. It's a measure of risk: the more confident the buyer is that the earnings will continue under them, the more years they'll pay for.

In the book I note that most one-off transaction businesses attract offers somewhere between two and seven times net profit, and that subscription businesses, especially software, can sell for multiples of revenue rather than profit. There's no official table. Multiples move with interest rates, the industry, the size of the business and how many buyers are around.

What pushes the multiple up:

• Recurring revenue that arrives automatically, by direct debit or card on file.
• Low churn and a long track record of customers staying.
• Diverse customers. No single client is more than about 10% of revenue.
• A team and systems that run the business without you.
• Clean monthly numbers that prove all of the above.
• Growth that a buyer can see continuing.

What pushes it down:

• The business depends on your relationships, your licence or your hands.
• A few customers make up most of the revenue.
• Revenue is lumpy and project-based.
• Records are messy or don't reconcile.
• Lease, compliance or key staff risks.

I go deeper on why recurring revenue earns a premium in how to value a subscription business.

Step 3: Adjust for what's included

The headline number usually assumes a sale of the business as a going concern with enough working capital and equipment to keep trading. Check what's in and out:

• Stock and work in progress (often added at cost).
• Plant and equipment (included, or valued separately).
• Prepaid customer obligations. If customers have paid in advance for service the buyer must deliver, expect the price to be adjusted for it.
• Employee entitlements that transfer with staff.
• Cash and debt (most small business sales are "cash free, debt free").

A worked example

Two plumbing businesses each have maintainable earnings of A$200,000.

• Business A does mostly one-off emergency jobs. The owner does most of the quoting and many of the big jobs. A buyer might pay a lower multiple, say 2.5 times: about A$500,000.
• Business B has 600 households on an annual maintenance plan paid monthly by direct debit, with a service manager running the schedule. Those customers are visible, billed automatically and likely to stay through a change of owner. A buyer might pay 4 times: about A$800,000.

Same profit. A A$300,000 difference. These multiples are illustrative, not market data, but the direction is what matters. It's the reason I wrote maintenance plans for plumbers and the other trade guides.

When you need a formal valuation for tax

Sometimes a value isn't just for negotiating. The tax law needs it too. The ATO lists situations where a market valuation can be required, including:

• Small business CGT concessions, where you rely on the A$6 million maximum net asset value test (rather than the A$2 million turnover test).
• Transfers between related parties, such as selling the business to a family member, a family trust or your own company, where market value can replace the actual price for CGT.
• Restructures that move a business between entities.

The ATO says a valuation must be objective and supported by appropriate evidence, and that valuations by professional valuers are generally more credible. If you properly instruct a professional valuer and the valuation turns out to be deficient, the ATO says you generally won't be liable for penalties.

The 2027 CGT changes

Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, the general 50% CGT discount ends for gains on assets sold from 1 July 2027. Individuals and trusts can instead index the cost base for inflation, and resident individuals face a minimum 30% tax rate on most capital gains. Assets you hold on 30 June 2027 are generally treated as revalued to market value at that date, with the pre-2027 part of the gain keeping the old discount treatment when you eventually sell. A time-apportionment method is an alternative to a valuation. Company tax rates and the small business CGT concessions aren't removed by the Act.

That's why a market valuation of the business as at 1 July 2027 is likely to matter. If a sale is possible in the next few years, talk to your accountant now. See CGT when selling a business.

Online calculators and brokers' appraisals

Free calculators can be useful for a ballpark. They can't see your add-backs, your churn or your customer concentration. Treat them as conversation starters.

A broker's appraisal is closer to a market view, but remember a broker's job is to win the listing. A formal valuation from an independent valuer or accountant costs more, but it's built to be defensible.

Your two-year plan to lift the value

1. Get clean monthly numbers. Separate recurring revenue, one-off revenue and owner costs.
2. Pay yourself a market wage through the books, so maintainable earnings are obvious.
3. Grow recurring revenue. Memberships, maintenance plans, retainers. Even 20% of revenue on automatic billing changes the story.
4. Track churn and retention every month.
5. Reduce key-person risk. Hire or promote someone who can run the day-to-day.
6. Diversify customers so no one client dominates.
7. Tidy your contracts, leases and compliance. Buyers' lawyers will find whatever you don't.
8. Get a valuation now, not when you're ready to sell, so you know what to work on.

Free Subscription Profit Review

Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:

• whether a subscription model could work for your business
• how recurring revenue could cover your fixed costs each month
• how it could lift what your business is worth

Book my free review Call 1300 272 422

No cost, no obligation. General information only until we understand your situation.

Frequently asked questions

Robert Coorey, MBA

Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.