How to Find a Profitable Small Business to Buy in Australia

Most people searching for a business to buy in Australia start in the wrong place. They open Seek Business or Bsale, scroll through listings, and try to work out what looks good — as if a profitable business announces itself with a nice banner and a reasonable asking price.

It doesn't work that way. The listings that look good often aren't. The businesses that are actually worth buying rarely look like anything special at first glance. And the criteria that matter — recurring revenue, owner dependency, customer concentration, EBITDA margins — rarely appear in a broker's information memorandum, at least not in any useful form.

Here's how to actually find a profitable small business to buy in Australia. Not where to look — that's covered in where to find businesses for sale. This is about what to look for once you're looking.

What "Profitable" Actually Means When You're Buying (Not Starting)

When people say they want a profitable small business, they usually mean one that makes good money. That's necessary but not sufficient. The word "profitable" has to mean something more specific when you're acquiring a business rather than starting one.

A profitable acquisition is a business that:

Makes money without you personally doing the work (or can be made to)
Has income that repeats without constant reselling effort
Has margins strong enough to service acquisition debt and still pay a salary
Doesn't depend on one customer, one employee, or the outgoing owner's relationships

Most small businesses in Australia tick one or two of these. Very few tick all four. The ones that do — those are the businesses worth buying.

A business can have $300,000 in annual profit and still be a terrible acquisition if that profit disappears when the owner leaves. I've looked at businesses where the owner personally held the relationships with the top three clients who accounted for 80% of revenue. On paper, the numbers looked fine. In practice, you weren't buying a business — you were buying a temporary income stream.

The Four Criteria That Actually Matter

Before you get excited about any listing, run it through these four filters.

1. Recurring Revenue

Does money come in automatically, or does the business have to go out and win new work every month?

Recurring revenue is the single most powerful signal of a good acquisition. It means the business has a floor — income that doesn't require constant effort to generate. Service contracts, maintenance agreements, subscription arrangements, route-based businesses (regular clients serviced on a schedule) — these all create recurring revenue.

Compare a commercial cleaning business with 40 contract clients who pay monthly versus a painting contractor who has to quote and win new jobs every week. Both might generate similar annual turnover. But the cleaning business is dramatically easier to value, easier to finance, and easier to operate without the original owner.

A broker told me once about a pest control business he'd sold three times in eight years. Same business, different buyers — each time it traded at a 20–30% premium to comparable businesses because of its recurring service contract book. Buyers understood what they were getting.

Trades businesses with service agreements — HVAC, commercial electrical, fire protection, lift maintenance — are worth specifically hunting for. They trade at higher multiples, yes, but they're also far less risky.

2. Owner Dependency

Can the business function without the current owner in it every day — or does everything route through them?

Owner dependency is the silent killer of small business acquisitions. It's rarely disclosed upfront and often not understood even by the owner themselves. They don't think of themselves as a key-person risk; they think of themselves as being helpful.

Questions to ask during initial conversations:

Who answers the phone when you're not here?
Who handles quotes or pricing decisions?
Do any customers specifically ask for you by name?
What would happen to revenue in the first six months if you stepped back?

Honest answers to these questions tell you more than three years of financial statements. A business where the owner is genuinely replaceable — where the processes, pricing, and customer relationships sit in the business rather than in the owner's head — is worth significantly more in practice than its stated price. A business that runs on the owner's relationships is worth less than it appears.

This is covered in depth in Module 2 of the Playbook.

3. Customer Concentration

If you lost your single biggest client, what percentage of revenue walks out the door?

The rule of thumb in PE is simple: no single customer should represent more than 15–20% of revenue. More than that and you have concentration risk — one contract termination can fundamentally alter the business's economics. In small businesses, it's common to find one client at 40–50%. That's not a business; that's a contractor relationship with employees attached.

Commercial cleaning, facilities management, trades with council or government contracts — these are particularly prone to concentration. The numbers look great until you find out that 60% of the revenue comes from one property management company, and the contract is up for tender in eight months (which is, incidentally, why the owner is selling now).

4. EBITDA Margin and What's Normalised

The headline profit figure in most small business listings is not the real profit figure. It's the owner's version of profit, which includes their own salary, their personal vehicle, their phone, their spouse's wages, and possibly a few expenses that don't survive close scrutiny.

Normalised EBITDA — earnings before interest, tax, depreciation, amortisation, and owner adjustments — is the number that matters. For a small Australian service business, you're looking for:

EBITDA margins above 15–20% (stronger businesses run 25–35%)
EBITDA of at least $150,000 to be worth the transaction costs
Enough margin to service acquisition debt and pay a market-rate salary to the person doing the owner's job

If you haven't already, read how to value a small business in Australia before engaging on any deal. Understanding normalisation is the difference between buying a business and buying a headache.

Which Industries Are Worth Targeting in Australia

Not all industries are equally good acquisition targets. Some have structural advantages. Here's where I'd focus.

Trades with Service Components

Plumbing, electrical, HVAC, air conditioning, fire protection, and commercial refrigeration all share a useful characteristic: the regulatory environment creates recurring work. Equipment requires regular maintenance, compliance checks, certifications. Customers can't simply decide to skip it.

Businesses in these trades that have built out their maintenance contract books — where technicians run a daily route rather than responding to call-outs — are the ones to find. They're more stable, more predictable, and more valuable.

Commercial Cleaning

Commercial cleaning businesses with contract clients are among the most straightforward acquisition targets in Australia. Revenue is monthly, staff are largely variable cost, margins are modest but consistent, and the operational complexity is low compared to trades.

The downside is they're popular. Everyone knows commercial cleaning is a simple business model, which means you'll face competition for listings. Off-market is the way to find the better ones.

Landscaping and Garden Maintenance

Maintenance contracts — mowing, pruning, irrigation servicing for strata, commercial properties, councils — are the version of landscaping worth buying. Design and construction work is project-based and therefore less predictable.

Look for the landscaping businesses where the majority of revenue comes from repeat clients on regular schedules, not one-off projects.

Pest Control

Route-based pest control with residential and commercial service contracts trades consistently well. It has strong recurring characteristics, relatively low capital requirements, and operates in a market with genuine regulatory barriers (licensing, chemical handling). It's an industry most corporate buyers ignore, which keeps prices sensible.

What to Avoid

B2B businesses with one or two dominant clients. Businesses where the owner is the only qualified tradesperson. Anything where growth has come entirely from the owner's personal sales effort. And any business where the seller can't clearly explain why the numbers are what they are (which is more common than you'd expect).

The Financial Profile That Signals a Good Acquisition

Before spending time on due diligence, run a quick filter on the financial profile. You're looking for:

Revenue: $500K–$3M for a first acquisition. Big enough to support proper staff and systems; small enough that the seller might take vendor finance.

EBITDA: $150K minimum. Ideally $200K–$400K for an acquisition in the $500K–$1.5M range.

Revenue trend: Flat or growing over the past three years. Declining revenue is not always a dealbreaker — sometimes it reflects the owner stepping back rather than market weakness — but it requires a clear explanation.

Customer count: At least 20–30 clients (more for high-volume, low-value contracts; fewer for high-value B2B relationships). Concentration below 20% per client.

Staff: A team that can operate without the owner present. Even if they're not doing so currently, the key question is whether the capability exists.

If a listing passes this filter, it's worth requesting a meeting with the broker and preliminary financials. If it doesn't, move on. There are enough businesses for sale in Australia that you don't need to talk yourself into bad ones.

A Note on Where to Look vs What to Look For

Most acquisition guides spend all their time on where to find businesses — Seek Business, Bsale, business brokers, direct outreach. Those channels matter, but they're table stakes. The harder skill, and the one that actually determines outcomes, is evaluating what you find.

The best types of businesses to buy in Australia covers industry selection in more depth. And once you've found a candidate that looks interesting, due diligence before buying is what separates buyers who get a good deal from those who inherit someone else's problems.

The process — initial contact, NDAs, information memoranda, meetings, due diligence, offer, settlement — is laid out in the full buying process.

FAQ

What is the most profitable small business to buy in Australia? Service businesses with recurring contracts — commercial cleaning, pest control, HVAC maintenance, commercial electrical — tend to deliver the most consistent EBITDA margins in the $500K–$3M revenue range. They're not glamorous, but they generate reliable cash flow.

How much money do you need to buy a small business in Australia? For businesses in the $300K–$1.5M price range, you'll typically need 20–30% as a deposit plus working capital, with the rest funded through bank lending or vendor finance. At $500K purchase price, expect to bring $100K–$150K of equity minimum.

How do you tell if a small business is profitable before buying? Start with normalised EBITDA — the profit figure after adjusting out owner salaries, personal expenses, and non-recurring items. Then check recurring revenue as a percentage of total revenue, customer concentration, and whether the business runs when the owner isn't present.

What red flags should you look for when buying a business? Revenue concentration over 20% with a single client, an owner who is the only qualified person in the business, declining revenue over three consecutive years, and financial records that don't reconcile with tax returns.

Next Steps

If you're in the early stages of looking for a business to buy, the Playbook walks through each stage of the acquisition process — from deciding whether acquisition is right for you through to the first 90 days after settlement.

And if you want to stay across deals, valuations, and what's actually working for buyers in the Australian market, the best place to start is the newsletter. Subscribe to The Leveraged Worker at nigelgordon.com — it's where I share the deals I'm looking at, the mistakes I've made, and the frameworks I use.