How Much Money Do You Need to Buy a Business in Australia?

The total amount of money you need to buy a business in Australia depends on three things: the size of the business, the financing structure, and how much of the purchase price the seller is willing to hold as vendor finance. For a small service business turning $80,000–$150,000 in annual profit, buyers typically need $80,000–$200,000 in accessible cash. For a mid-size business earning $250,000–$500,000, plan on $200,000–$400,000 in equity, with a bank lending the rest. These figures are not purchase prices — they're what you need in your bank account before you sign anything.

That distinction matters. The purchase price is usually two to four times the annual profit. The cash you need is a fraction of that — but it's real money, it needs to be unencumbered, and the bank will want to see it before they'll talk to you.

What different price points actually buy you

$50,000–$100,000 in cash: You're looking at very small businesses — a sole-operator gardening run, a basic residential cleaning business with one or two part-time staff, or a business with significant owner-dependency. At this level, most deals involve a high proportion of vendor finance (where the seller loans you part of the price), and competition from experienced buyers is low — mostly because the businesses are small enough that experienced buyers aren't interested. That can be an advantage.

$100,000–$200,000 in cash: This is the sweet spot for first-time buyers in Australia. With $150,000 in cash and a bank willing to lend at 60–70% of the purchase price, you can look at businesses priced up to $400,000–$450,000. That range covers decent small service businesses — a commercial cleaning company with 3–4 staff and regular contracts, a pest control business with residential recurring revenue, a lawn maintenance run with established suburban clients. Not glamorous, but profitable.

$200,000–$400,000 in cash: You're now accessing trades businesses with real infrastructure — a plumbing company with 4–5 licensed technicians and a dispatcher, an electrical business with commercial clients, a landscaping business with equipment and a long-term maintenance book. With bank leverage, you can target businesses priced $600,000–$1,000,000. At this level, the businesses are large enough to hire a manager, which means you're not necessarily in the van on day one.

$400,000+: Mid-size acquisitions with genuine recurring revenue — HVAC maintenance contracts, multi-crew fencing and concrete businesses, established pest control franchises. Banks will lend against these more willingly because the financials are cleaner and the businesses are less dependent on a single operator.

Rule of thumb: for every $100,000 in cash equity, you can access roughly $250,000–$350,000 in total purchase price — assuming you use bank debt, vendor finance, or a combination of both.

The deposit question: cash versus purchase price

Most people asking "how much money do I need" are actually asking two different questions without realising it: how much is the business, and how much cash do I personally need to bring.

In Australian business acquisitions, banks typically lend 50–70% of the purchase price for a service or trades business, depending on the quality of the financials, the industry, and whether the business has tangible assets. That means you need 30–50% in cash equity. On a $500,000 deal, you're looking at bringing $150,000–$250,000 to the table.

The exact split depends on what you're buying. A business with hard assets — equipment, vehicles, fit-out — is easier to lend against than a business whose value sits entirely in goodwill and customer relationships. Banks will lend more readily on a concrete pumping business with $300,000 worth of machinery than on a virtual assistant agency of equivalent profit.

Vendor finance changes this equation. If the seller is willing to hold 10–20% of the purchase price as a loan (paid back over 2–3 years post-settlement), your required cash equity drops accordingly — and banks often look favourably on vendor finance as a signal that the seller believes in the business's future performance. I'd read the vendor finance article before your first broker conversation; it's one of the most useful levers buyers have and one of the least understood.

What banks will (and won't) lend for

Australian banks will lend for business acquisition, but not on the same terms as a home loan. You're looking at commercial lending — higher rates, shorter terms, and a much more forensic assessment of the business's financials.

What banks want to see before they'll lend:

Three years of financials: Tax returns, BAS statements, profit and loss. Anything less and most banks will decline.
Serviceable cash flow: The business's earnings need to cover loan repayments with headroom — typically at a debt service coverage ratio of 1.3x or better.
Tangible security: Either business assets, or your personal property, or both. Most small business loans require a personal guarantee (more on that below).
Industry stability: Banks are cautious about certain sectors. Commercial cleaning and pest control are generally easier to finance than, say, a café or a fashion retailer.

A broker told me recently about a deal where the buyer had exactly the right deposit, great financials, clean credit — and still got knocked back by two lenders because the industry code was flagged as high-risk. They ended up using a non-bank lender at a higher rate. It closed, but it cost them.

Rule of thumb: In Australia, banks will typically lend 3–4x EBITDA for a profitable service business with demonstrable recurring revenue and genuine assets to secure against.

For a deeper look at the lending landscape, the how to finance buying a small business in Australia article walks through the major bank options, non-bank alternatives, and what to include in your loan application.

The costs beyond the purchase price

This is where first-time buyers consistently underestimate. The purchase price is not the total cost. Budget separately for:

Legal costs: $5,000–$15,000 for a solicitor to review the Sale and Purchase Agreement, conduct searches, handle settlement. Don't skimp here (I know someone who did — he discovered an undisclosed supplier agreement three years in that cost him more than he saved on legal fees).

Accountant and due diligence: $3,000–$10,000 for an accountant to verify the financials and normalise EBITDA. If you're spending $400,000, this is not the place to go it alone.

Working capital buffer: Most businesses need operating capital to function between invoicing customers and paying suppliers and staff. Budget for 4–8 weeks of operating costs to sit in the business account from day one. This is money that doesn't appear on the sale contract, but it's just as real.

Stamp duty: In most Australian states, stamp duty applies to the business transfer. The rate varies by state and by whether you're doing an asset or share sale. Your solicitor will advise, but factor it in early.

Rule of thumb: Add 7–12% of the purchase price to cover transaction costs, working capital, and buffer. On a $400,000 deal, that's another $28,000–$48,000.

This is covered in detail in Module 1 of the Playbook — specifically the financial readiness section, which walks through what "being ready to buy" actually means in dollar terms.

The personal guarantee: what it means for your finances

Almost every small business acquisition in Australia requires the buyer to provide a personal guarantee on the bank lending. This means if the business fails and can't repay the debt, you're personally liable. The bank can come after your personal assets — including, in most cases, your home.

This isn't mentioned to scare you off. It's mentioned because most first-time buyers don't model it properly. The question isn't just "can I afford this deal" — it's "can I absorb a worst-case outcome."

A genuine financial readiness assessment includes a stress test: if the business earns nothing for 12 months and I have to service the debt personally, what happens? If the answer is "I lose my house," the buffer isn't big enough.

Financial readiness: beyond the numbers

Money is necessary but not sufficient. The other readiness questions worth working through before you approach a broker:

Do you have 6 months of personal living expenses completely separate from deal funds? Acquisition processes take 3–6 months from first conversation to settlement. You need to be able to eat during that time without dipping into your deposit.
Can you sustain a below-forecast year one? Most acquisitions have a transition period. Revenue sometimes dips. Plan for it.
Is your partner aligned? A business acquisition at $300,000–$500,000 is a major household financial decision. If one person in the partnership is not genuinely on board, no deal structure makes up for it.

Want a full checklist for assessing your financial and personal readiness? Grab the Am I Ready to Buy a Business? checklist — it covers 40 questions across financial position, risk tolerance, skills, and lifestyle fit.

FAQ

How much deposit do I need to buy a business in Australia?

Typically 30–50% of the purchase price as cash equity. On a $500,000 business, that's $150,000–$250,000. Vendor finance from the seller can reduce this by 10–20%, and some deals layer bank debt, vendor finance, and cash to minimise the upfront requirement.

Is $100,000 enough to buy a business in Australia?

Yes, with the right deal structure. At $100,000 in cash, you can look at businesses priced up to $250,000–$300,000 using bank lending. That typically means small service businesses turning $60,000–$90,000 in profit. The selection is narrower but deals exist — especially if the seller is willing to carry some vendor finance.

How much is a business worth with $1 million in sales in Australia?

Revenue alone doesn't set the value — profit does. A business with $1 million in sales and a 15% net margin earns $150,000, which at 2.5–3x EBITDA is worth roughly $375,000–$450,000. The same revenue at 30% margin is worth twice as much. When someone quotes a revenue figure without mentioning profit, ask why.

Can you buy a business in Australia with no money?

Rarely, and not safely. Some deals use 100% vendor finance, but a seller willing to accept no cash upfront is usually doing so because they can't find a better buyer — which raises the question of why. A genuine no-money-down acquisition is uncommon; most require at least 20–30% in cash equity.

Is a business worth three times profit?

For many small Australian service businesses, 2.5–3.5x EBITDA is a common range — but it varies by industry, growth trajectory, and owner dependency. A cleaning business with a single contract that expires in six months might trade at 1.5x. A pest control business with 800 recurring residential clients and minimal owner involvement might fetch 4x. The multiple rewards certainty; it discounts risk. For more on how valuations work, how to value a small business covers the methodology in detail.

The Leveraged Worker newsletter goes deeper on deal structures, financing, and what the numbers really mean when you're buying your first business in Australia. If this is the kind of thing you want in your inbox, you know where to find it.