That detail matters, though. It's why two businesses with the same profit can sell $100,000 apart, and why the number in an owner's head is often a long way from the number a buyer will pay.
The quick answer
For most owner-operated businesses in New Zealand, a rough price looks like this:
Adjusted annual earnings × a multiple + stock at settlement
Adjusted earnings are your profit before your own wages, interest, depreciation and any personal or one-off costs. The multiple reflects risk, and for most small businesses it's a low single-digit figure.
So a business earning $120,000 before the owner's wage, at an illustrative multiple of 2, points to around $240,000 plus stock. Our business worth calculator runs those numbers for you and emails an indicative range.
Why owners and buyers see different numbers
Most owners overestimate, usually because they're counting things a buyer won't pay for.
Your hours. Twenty years of early starts built the business. A buyer pays for what it earns from here on, and they'll be putting in the hours themselves.
Turnover. A $900,000 turnover sounds impressive. If the business clears $90,000, that's what gets priced.
What the gear cost you. A $60,000 coffee machine bought new five years ago is worth what it would fetch secondhand today.
Potential. "You could easily double sales with a website." Maybe. Buyers rarely pay for growth they'd have to create themselves.
It cuts the other way too. Owners often undervalue a loyal customer base, a long lease or a manager who could run the place. Those count for a lot.
How much is my business worth right now? Five questions
Answer these honestly and you'll know roughly where you sit within your industry's range.
- Could the business run for a month without you? If yes, you're likely at the stronger end.
- How long is left on your lease, including renewals? Five years or more gives a buyer room. Under two is a problem.
- Does any one customer make up over a fifth of sales? If so, a buyer will price that risk in.
- Has profit grown, held or fallen over three years? Trend matters as much as this year's figure.
- Do your accounts tell a clean story? Figures that match your GST returns and need no explaining build trust fast.
Getting a number you can plan around
Your own estimate and the calculator are a good place to start. When you're ready to plan a sale, you'll want a written appraisal from a licensed broker. Under the Real Estate Agents Act rules, it has to reflect current market conditions and be backed by sales of similar businesses.
Ours is free and confidential, and there's no obligation to list. Milan will give you a written view of what the business would sell for today and what would move it higher. Email him directly at milan@sellmybusinessnz.co.nz.
If you need a figure for a shareholder exit, a separation, tax or the bank, that calls for an independent business valuation from a chartered accountant.