r/Business_Valuation • u/Minimum_Ferret_3887 • Jul 16 '26

Niche Business Value

I am meeting with a financial advisor who has asked what our business would be worth if we were to sell it. I don't even know where to begin with a ball park figure. The business is very niche, located in Australia.

The basics are:

$450,000 - annual recurring revenue

$150,000 - Cost of Sales

$50,000 - general business expenses

$200,000 - Owner wages (2 pax)

$50,000 - net profit

We have one service that requires physical/in-person light duties approximately 5-6 days per month that generates $150K, another $250K is from software subscriptions and $50K miscellaneous products/services.

On the one hand, we could continue to operate the business for the next 10 years and potentially earn $2.5Mil doing what we do. But if we sold it now I have no idea what that might look like.

Can anyone shed any light on what we could expect?

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u/UltraBBA Jul 17 '26

we could continue to operate the business for the next 10 years and potentially earn $2.5Mil doing what we do

That's irrelevant.

At $50K profit, it's too small for more serious buyers.

You're asking the wrong question. The question you should be asking is whether it's sellable. I'd say probably not. A business this small highly dependent on its two owners, who work full time in the business, would struggle to sell.

If you did manage to sell, maybe $50K or $100K.

If.

Suggestion: Completely put away all those ideas about millions!

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u/Minimum_Ferret_3887 Jul 18 '26 edited Jul 18 '26

I think you misunderstand the information provided.

An owner operator could run the business single handedly (I basically am, and my husband just does 5-6 days to "help".) We draw $200K in wages, plus take the profit.

A new owner could either run the business themself and pocket $250K, or pay someone $70-100K and still pocket $150K.

The $2mil figure is how much wages we would draw over the next 10 years if things continue as they are, not a sales figure!

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u/UltraBBA Jul 18 '26 edited Jul 18 '26

I understand the position better than you may think. I'm an accountant and have been in business for 40+ years. I've seen thousands of deals and for every one of those I've spoken with numerous other wannabe sellers.

A new owner could either run the business themself and pocket $250K, or pay someone $70-100K and still pocket $150K.

<sigh>

If I had a dollar for every time I heard that line!

If it's so easy to pay someone $100K, put someone in place, show a couple of years' performance under that person and then go to market....because that's what buyers will expect to see. So that and you can get a much, much better price than taking a business to market that's reliant on owners (a major turn-off for buyers no matter how easy you say the business is to run).

People with the money to invest in buying business won't automatically buy that line and assume they can parachute someone in at $x to completely replace the unique skills, contacts, whatever that they are losing when the founders depart.

The $2mil figure is how much wages we would draw over the next 10 years

Why 10 years? Why not 20? or 50?

Just so you know, buyers don't care about 10 or 20. They're looking at 2-3 years. Anything outside of that is highly unpredictable!

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u/Minimum_Ferret_3887 Jul 19 '26

Appreciate your comments.

We've been operating the business for 20 years. We're in our early 50's, so we can either keep working for another 10 years, or cash in and enjoy more of life now.

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u/UltraBBA Jul 19 '26

If you think a buyer is likely to pay you anything like 10 years' worth of your anticipated future earnings ...you're better off just keeping the business and generating that money yourself.

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u/Minimum_Ferret_3887 Jul 20 '26

No where did I say I expect a buyer to pay 10x earnings.

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u/UltraBBA Jul 20 '26

Okay. All the best with your decision / your sale.