What numbers should you check before buying a business?
Joe Antonini, Business Broker · Licence 4673920 · Launch Asset Brokers
3 November 2026
What numbers should you check before buying a business?
Start with adjusted net profit, meaning what the business really earns once a fair owner's wage is accounted for. Then compare the asking price to that profit, and check rent as a share of turnover. Look at the years left on the lease, wages as a share of sales, and whether sales have grown or slipped over three years.
In brief
- Turnover gets attention; profit pays the loan
- The price-to-profit multiple tells you how many years of profit you're paying for
- High rent and a short lease cap what any buyer can pay
- Check that the profit and loss, tax returns and BAS tell the same story
1. Adjusted net profit
This is the most important number in any listing. It starts with the net profit on the books, then adds back costs a new owner won't carry: the owner's own wage, depreciation, interest on the seller's loans and genuine one-off expenses.
Ask for each add-back to be listed and explained. If the business only works with the owner on the floor 60 hours a week, take a fair wage back out, because you'll either work those hours or pay someone to.
2. Price compared with profit
Divide the asking price by the adjusted net profit. A $300,000 price on $120,000 of adjusted profit is a multiple of 2.5. That's roughly how many years of profit you're paying for before the business has paid for itself.
A lower multiple isn't automatically a bargain. Check the next four numbers to see why the price is where it is.
3. Rent as a share of turnover
Rent is the cost you can least control. Divide the yearly rent and outgoings by yearly turnover. For example, a café turning over $12,000 a week ($624,000 a year) on $60,000 rent is at 9.6%. What's healthy depends on the industry, so ask your broker or accountant for the benchmark for that type of business.
4. Years left on the lease
Add the remaining term to any options. Many buyers and lenders look for at least five years in total, because a short lease limits how long you can trade and makes finance harder to get. Check the rent review dates and how the rent goes up at each one.
5. Wages as a share of sales
Compare total wages and super with turnover. Very low wages can mean the owner or family work unpaid shifts that you'll need to cover. Very high wages can point to a rostering problem you could fix, or a business that only works with a big team.
6. The three-year trend
Ask for three years of profit and loss statements, plus recent BAS. Are sales and profit rising, flat or falling? Do the BAS figures match the profit and loss? A business that's growing is worth more than one coasting on last year's numbers.
Also check
- Stock at value (SAV): stock is usually paid for on top of the price, counted at settlement
- Equipment: what's owned, what's leased, and what needs replacing soon
- Licences: whether liquor, food or health registrations can transfer to you
Questions buyers ask
What is adjusted net profit?
Net profit with the owner's wage, depreciation, interest and one-off costs added back. It shows what the business earns for a new owner.
What's a good price-to-profit multiple?
It depends on the size and type of business, the lease and how much it relies on the owner. Smaller owner-run businesses usually sell on lower multiples than larger managed ones.
How many years of financials should I ask for?
At least three years of profit and loss statements and tax returns, plus the latest BAS.
What does SAV mean on a listing?
Stock at value. The stock is paid for on top of the asking price, at cost, based on a count at settlement.
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