What's Your Perth Business Actually Worth?

When sellers ask "what's my business worth?", they often hope for a single confident number. The honest answer is: it's a range, and the range depends on a dozen things. This guide explains how Perth brokers actually arrive at the number, the seven factors that move it most, and what an honest appraisal looks like.

If you'd rather skip ahead and get a free written valuation, request one here. I deliver them within 5 business days, based on real comparable Perth sales — not theoretical multiples.

The two-number approach to valuation

For most Perth small-to-mid businesses, valuation reduces to:

Sale price = Normalised earnings × Industry multiple

Normalised earnings (sometimes called SDE for Seller's Discretionary Earnings) is your reported net profit, plus add-backs for owner's wages, vehicles, personal expenses run through the business, one-off costs, etc. It's what a new owner would actually take home.

The multiple depends on industry, business size, and risk. Full multiples breakdown here.

Indicative Perth multiples by business size

These are ranges, not promises. Where your business sits within (or above/below) the range depends on the seven factors below.

The 7 things that actually move the multiple

1. Owner-dependency. If the business runs without you for a month, you're at the top of the range. If everything stops when you're away, you're at the bottom.
2. Recurring revenue. Subscriptions, retainers, contracts, repeat customers. 30%+ recurring revenue can move you from 3× to 5×.
3. Customer concentration. Top customer over 30% of revenue = significant discount. Diversified customer base = top of range.
4. Lease security. 5+ years on the lease = premium. 12 months left = 20–30% discount.
5. Profit trajectory. Three years of growth = top of range. Flat = mid. Declining = the conversation gets hard.
6. Industry tailwinds. Growing categories (ageing population services, e-commerce-resistant trades, regulated sectors) get higher multiples than shrinking ones.
7. Quality of records. Three years of accountant-prepared financials with consistent methodology = trust premium. Messy books = automatic discount.

Methods Perth brokers use

1. Multiple of earnings (most common)

The approach above. Used for ~80% of Perth small business sales. Reflects what buyers actually pay because it's grounded in observed transactions.

2. Discounted cash flow (DCF)

Projects future cash flows and discounts them to present value. Used for businesses with predictable, contracted future revenue (utilities, infrastructure, long-contract service businesses). Less common for small Perth businesses.

3. Asset-based valuation

Add up the value of the equipment, stock, fitout, vehicles, and any tangible assets. Useful as a floor — the business should be worth at least this. Often the basis for distressed or liquidation sales.

4. Industry rules of thumb

Real estate agencies often value at 1× annual gross commission income. Pubs at 4–5× weekly takings. Cafés at 1.5–2.5× SDE. Useful sanity checks but not substitutes for proper analysis.

What an honest valuation actually looks like

A proper appraisal is a written 4–8 page document covering:

• Three-year financial summary with normalised earnings calculations
• Add-back schedule with each item documented
• Comparable Perth sales (anonymised) within ±20% of your business's size and industry
• Indicative price range (e.g. $850k–$1.1M) with the assumptions behind each end
• Specific recommendations for what would move the price toward the top of the range
• Realistic timeline expectations

If a broker gives you a single confident number without any of this, that's a red flag. They're either inflating the number to win your listing, or they don't actually have the comparable data to back it up.

Free vs paid valuations: which do you need?

For most owners thinking about selling in the next 24 months, a free broker appraisal is enough — you get a defensible price range and an action plan. They're given for free because brokers are competing for your future listing.

You need a paid formal valuation ($2,500–$8,000) when:

• You're going through a divorce, partnership dispute, or estate planning matter
• You need a valuation accepted by the ATO or a court
• A bank requires it for refinance or business lending
• You're selling to a related party (family/staff) and need a defensible "fair market value"