How do I know what to sell my Business For?

A Practical Guide to Small Business Pricing – the Bonza Way

Putting a price on a business is both an art and a science. There’s no single formula or universal rule. At Bonza, we specialise in helping small business owners understand what their business is really worth, not just on paper, but in today’s market.

Your business is ultimately worth what a buyer is prepared to pay. But that value isn’t plucked from thin air. It’s informed by financials, assets, industry benchmarks, future potential and buyer demand. This guide walks you through the three most common methods we use when valuing small businesses across Australia.

1. Return on Investment (ROI): Turning Profit into Price

This method calculates what a buyer is likely to earn from owning your business and uses that to determine a fair market value.

How it works
We calculate your Adjusted Net Profit, which is your business’s annual net profit with personal expenses, one-off costs and non-recurring items added back in. These are called addbacks.

Examples of addbacks
• Your owner's wage or director’s salary
• Personal car expenses paid by the business
• One-off repairs or equipment purchases
• Travel or training costs unrelated to core operations

Once we have your Adjusted Net Profit, we apply a multiplier, typically between 1x to 4x, depending on factors such as:
• Total adjusted net profit
• Business age and track record
• Owner involvement
• Industry demand and trends
• Location and lease
• Staffing and operational systems

Example
If your adjusted net profit is $100,000 per annum and the business has stable earnings with low owner input, it might justify a 2x multiple.
$100,000 x 2 = $200,000 sale price

Best suited for
• Profitable businesses with at least $30,000 adjusted net profit
• Established operations with clean, consistent financials
• Businesses with limited plant and equipment value

2. Establishment Value: Selling the Setup

This method calculates the value based on the cost to build or replace the business from scratch. It is most relevant when profit isn’t strong yet, but the tangible investment in setup or assets has created real value.

How it works
We look at what’s been spent on:
• Fit-outs and renovations
• Equipment, tools or machinery
• Licences or certifications
• Stock or inventory
• Brand development and digital presence

These costs are typically discounted to reflect depreciation and buyer risk.

Example
You’ve spent $150,000 setting up a boutique gym with quality leased equipment and a premium fit-out. The business is breaking even, but with a growing customer base. A pricing point of $125,000 could attract buyers with a lower entry cost.

Best suited for
• Newly launched businesses
• Startups with major upfront investment
• Break-even operations in good locations or niches

3. Tangible Assets Plus Profit: When Assets and Earnings Align

This method is used when the business holds significant plant and equipment, and the combined value of those assets plus one year’s profit gives a stronger return than the standard ROI model.

How it works
We determine the current market value of the plant, equipment and other tangible assets. Then we add one year of Adjusted Net Profit on top.

This approach often applies when businesses are asset-heavy, such as in manufacturing, trades or transport, and those assets contribute directly to income generation.

Example
A mechanical services business has
• $150,000 in market-value plant and equipment
• $100,000 in adjusted net profit

If the ROI method gives a valuation of $200,000 using a 2x multiple, but the assets alone are worth $150,000, we may recommend pricing the business at
$150,000 in assets plus $100,000 in profit = $250,000 sale price

Best suited for
• Asset-rich businesses where equipment is essential
• Trades and mobile services with significant tools or vehicles
• Businesses where ROI does not reflect the full value due to depreciation or reinvestment

So What’s My Next Move?

If you’re serious about getting your business on the market, or even just curious then the next step is simple:

Get a free, no-obligation appraisal with Bonza.

We’ll:

• Review your financials
• Build your addback schedule
• Run your numbers through all 3 pricing methods
• Provide a realistic valuation range based on current market conditions

Click here to request your appraisal or call us today on 1300 266 922 and chat with a small business specialist.

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