How to buy a business in Australia, step by step

Buying an established business can be a faster route to a steady income than starting from scratch: customers, staff, systems and cash flow already exist. But you’re paying for that head start, and the price only makes sense if the business really delivers what the seller says it does.

Is buying a business right for you?

business.gov.au suggests starting with yourself: your skills, the time you can commit, your personal goals and the capital you have. A few honest questions:

• Do you understand this industry, or will you be learning on the job?
• Can you live on less for the first year while you settle in?
• How much of your own money can you put in — and how much can you afford to lose?
• Will your family support the hours and the risk?

How do you find the right business?

Look beyond the listing sites. Good businesses change hands through brokers, accountants, industry contacts and direct approaches to owners nearing retirement. Focus on:

• businesses in industries you know;
• sustainable profit, not just revenue;
• a customer base that isn’t dependent on one client or the current owner personally;
• a location, lease and premises that will still work in five years.

How do you work out what to pay?

Value comes from future profit. Our guide on how to value a small business walks through the methods business.gov.au describes — return on investment, asset-based, replacement cost and future profit. The seller’s asking price is a starting point, not a verdict.

What should due diligence cover?

business.gov.au recommends reviewing financial records, operations and legal documents, including three to five years of financial statements. At a minimum:

Area	What to check
Financial	Profit and loss, balance sheets, BAS, tax returns, bank statements, debtors, creditors
Legal	Lease, contracts, licences, permits, intellectual property, disputes
Operational	Equipment condition, stock, suppliers, systems, key staff
Customers	Concentration, contracts, churn, reviews
Staff	Awards, entitlements, contracts, who’s staying

Our deeper guide to due diligence on the financials shows how to reconcile what the seller says with what the bank statements show.

Before you negotiate, it’s worth knowing what funding you could line up. Find out what you might qualify for — there’s no credit check to enquire.

How is the deal usually structured?

A typical small business sale covers:

• Goodwill — the value of the business’s reputation, customers and earning capacity;
• Plant and equipment;
• Stock — usually valued at settlement, separately from the price;
• The lease — assigned to you with the landlord’s consent, or a new lease;
• Staff — who transfers and how entitlements are handled;
• Handover — training and support from the seller;
• Restraint of trade — stopping the seller opening next door.

GST: the ATO says a sale can be a GST-free supply of a going concern if it’s for payment, the buyer is registered or required to be registered for GST, and both parties agree in writing that it’s a going concern. Your accountant will confirm the details. Duty on business purchases varies by state, so check with your state revenue office.

How do you fund the purchase — and the first months?

Buyers often focus on the purchase price and forget working capital. After settlement you’ll need cash for wages, stock, BAS and the bills that arrive before the first customers pay you. Budget for:

1. Deposit and purchase price;
2. Stock at valuation;
3. Legal, accounting and other transaction costs;
4. Working capital for at least the first quarter — model it in our 13-week cash-flow forecaster.

Funding options often include a loan secured against property you already own, a loan secured against the business’s commercial property if it’s part of the sale, and in some cases vendor finance where the seller accepts part of the price over time. Our feature on when to borrow explains how to match the facility to the purpose.

What mistakes do first-time buyers make?

• Buying a job, not a business. If the profit relies on the owner working 60 hours a week, you’re buying those hours too.
• Skipping the lease. A great business in premises with a short or unassignable lease can lose its value overnight.
• Stretching for the price and forgetting working capital. Settling with nothing left over leaves no room for a slow first quarter.
• Relying on the seller’s add-backs. Test every adjustment to profit — our financial due diligence guide shows how.
• Changing too much, too fast. Customers and staff are watching. Learn the business before you reshape it.
• No handover plan. Agree the seller’s training period and introductions to key customers in the contract.

Each of these is avoidable with time, advice and an honest look at the numbers. Our feature on reading a profit and loss statement is a good place to sharpen your eye before you start.

Funding the purchase properly

A business purchase is one of the biggest financial decisions most owners make. The right structure — enough to settle, enough to operate — gives the new owner room to learn the business without cash pressure.

Our team considers property-secured loans from $20,000 to $5,000,000 over residential or commercial property, and unsecured facilities for trading businesses typically from $5,000 to $500,000. You can enquire without a credit check, we don’t auction your details to a panel of lenders, and a real person who understands business purchases will call you. Please fill in the form accurately — purchase price, what you’re contributing and any property you own — so we can map the right option at the first conversation.

See if you qualify →