Questions to Ask When Buying a Small Business in Australia: The Seller Interview That Saves You Money

When buying a small business in Australia, the questions you ask the seller before signing anything are often more valuable than any accountant's report. A seller interview — done properly — tells you where to point the accountants, what's actually driving the price, and whether you're looking at a business or a heavily disguised job.

Most buyers go into this meeting with a vague checklist downloaded from a business broker's website. The seller gives polished answers. The buyer nods, feeling like they're doing due diligence. They're not.

These are the questions that actually matter.

Why is the owner selling?

The most important question in any business purchase — and also the one where sellers are most likely to give you a rehearsed answer.

"Retirement" and "wanting to spend more time with family" are the acceptable faces of many different realities. That's not always dishonest — plenty of genuine retirements happen — but it's worth digging. Ask when they decided to sell. Ask what triggered the decision. Ask if they'd considered selling before, and what stopped them.

The rule of thumb: the longer a business has been on the market, the worse the real reason is — or the higher the price is relative to what the market will pay. Often both.

A seller who decided to sell 18 months ago when revenue was declining has a very different motivation to one who called their broker last week because they'd had an unsolicited approach. Understanding the motivation shapes everything that follows.

What exactly am I buying?

This sounds obvious until you realise how much variation there is in practice. In Australia, most small business sales are structured as asset sales — you're buying the plant, equipment, goodwill, customer lists, and intellectual property, but not the company itself. That has real implications for tax, for liability, and for what actually transfers on settlement day.

Ask specifically:

Which assets are included, and which are excluded?
Are there any plant leases or equipment finance arrangements I'd be assuming?
What's the stock situation — included in the price or at valuation on settlement?
Are there any debts or contingent liabilities staying with the business?
What intellectual property is in the sale — trading name, website, software, systems?

You're building a picture of exactly what crosses the line on settlement day. Anything vague here needs to be nailed down in writing before you go further.

This is covered in depth in Module 5 of the Playbook — the due diligence module is about knowing precisely what you're acquiring before you commit money or emotion to it.

How has the business performed financially?

The headline number in any information memorandum is EBITDA — earnings before interest, tax, depreciation and amortisation. Don't trust it until you've verified it yourself.

Ask for three to five years of profit and loss statements, tax returns, and the most recent BAS lodgements. Then ask for a full breakdown of owner add-backs.

An add-back is an expense the owner ran through the business that you wouldn't incur. Some are completely legitimate — a personal car, a mobile phone, a salary paid to a family member who didn't genuinely work there. Some are creative. I've seen a seller add back his wife's salary (legitimate, she wasn't working in the business), his boat registration (less legitimate), and his membership at two golf clubs (absolutely not legitimate, though he seemed quite confident about it).

The rule of thumb for add-backs: if you'd actually incur the cost to run the business properly, it's not an add-back. If you genuinely wouldn't, it is. The line gets blurry fast — which is exactly why you need a good accountant once you've identified the questions.

For more on this, read how to check financials when buying a business before this conversation — it'll help you know what you're looking at when the documents land.

Who are the customers, and how dependent is the business on them?

Customer concentration is one of the most underpriced risks in small business acquisitions. If 40% of revenue comes from one client, that client is effectively a silent co-owner — you just don't get a say in whether they stay.

Ask the seller:

Who are the top ten customers by revenue?
What percentage does the largest customer represent?
Are there written contracts, or ongoing relationships on goodwill?
Has any customer recently reduced their spend, changed requirements, or given any signal they might leave?

The benchmark: less than 20% from a single customer is generally manageable. Above 30%, you need to understand why that client stays, and what happens to the business if they don't. Above 40%, that risk needs to be reflected in the price — and often isn't.

For trades businesses specifically, ask about the residential vs commercial split. Commercial work is often more predictable but more competitively tendered; residential work can be lumpy but often comes from recurring relationships.

We've covered customer concentration risk when buying a business in more depth — worth reading before you start crunching numbers on any deal.

What's the situation with staff?

Staff are often the real asset you're buying in a trades or service business — and also the biggest post-settlement risk if you get the transition wrong.

Ask:

How many employees, and what are their roles?
Who are the key people, and what happens to the business if they leave?
Are there any family members employed, and what do they actually do? (The "wife's in the office" is sometimes critical and sometimes an admin fiction)
Are there any current disputes, WorkCover claims, or Fair Work complaints?
What are the current accrued leave balances?

That last point catches buyers out more often than it should. If the business has three long-serving staff with substantial leave balances, those entitlements are a liability. They either need to be paid out before settlement or explicitly factored into your price. More on this in employee entitlements due diligence.

How dependent is the business on the owner?

This question separates a real business from an owner who's been buying themselves a very expensive job — and is now trying to sell that job to you at four times earnings.

Ask:

What does the owner actually do on a typical day?
What would stop working if the owner walked out tomorrow?
How many customer relationships are personal to the owner?
Are there any suppliers where the owner's personal relationship affects pricing or access?

The two-week test: a business should be able to operate for two weeks without the owner without anything breaking. If the answer to the second question above is "everything" — that's not a business, it's a contractor with employees. You're paying a multiple for an asset that leaves on handover day.

Assessing owner dependency properly is one of the most important pre-purchase skills to develop, because sellers are very rarely honest about it — not out of dishonesty, but because most owners genuinely don't see how much the business runs on them personally.

What systems and operations are actually in place?

The operational bones of the business matter, especially in trades. Some owners have built genuinely robust systems. Most have built systems in their head that look robust until the handover.

Ask:

What software does the business use for jobs management, scheduling, invoicing, and payroll?
Is the quoting process documented, or does the owner do it from experience and instinct?
Who are the key suppliers, and are those relationships transferable to a new owner?
Are there any contracts with suppliers that would need to be renegotiated or re-executed?

For trades businesses, the quoting process is particularly important. A business that can only price jobs because the owner has twenty years of pricing knowledge sitting in his head is a fundamentally different asset to one with a documented quoting model that any competent person could follow. See operational due diligence for a framework to assess this properly.

What licences, permits, and registrations does the business hold?

In Australia, many trades businesses hold licences that are personal to the licence holder, not to the business entity. A plumbing contractor's licence, an electrical contractor's licence, a builder's licence — these travel with a qualified individual.

If the current owner holds the licence personally and you're not a qualified tradesperson in that area, you need a plan on day one.

Ask:

What licences and permits does the business operate under?
Are any of these personal licences held by the owner specifically?
What happens to them on settlement?
Are there any pending renewals, compliance reviews, or enforcement actions?

This is not an area where you want surprises. If the business can't operate legally without a licence the current owner holds in their personal name, that needs to be resolved in the contract — not discovered on settlement day.

How was the asking price calculated?

Most sellers have a price in their head — some because a broker told them, some because they added up the equipment and doubled it, some because their brother-in-law said it was worth that. Very few have done a proper valuation using normalised EBITDA and industry multiples.

Ask:

How did you arrive at this price?
What multiple of earnings does this represent?
How have you normalised the earnings?
What's included in goodwill, and why?

If the seller can't explain the price in terms of a multiple of verifiable, normalised earnings — that tells you something. It doesn't automatically mean the price is wrong. But it means you need to do your own work. How to value a small business in Australia is a practical starting point.

Want the full structured checklist — 60+ questions covering every stage of the seller interview? Grab the free Seller Questions Checklist — it's the version I'd hand someone going into their first serious conversation with a seller.

FAQ

When buying a small business in Australia, what questions should I ask?

Ask why the owner is selling, what exactly is included in the sale, how the business has performed over three to five years, who the key customers are, what the staff situation and accrued entitlements look like, how dependent the business is on the owner, and how the asking price was calculated.

What to look for when buying a business in Australia?

The key things to assess are normalised financial performance, customer concentration risk, owner dependency, the status of key licences and permits, staff retention risk, and whether the price reflects a sensible multiple of maintainable earnings after proper add-back adjustments.

What are the 10 questions to ask a business owner when buying?

Why are you selling? What's included? What are the normalised earnings? Who are the customers? How concentrated is the revenue? What's the staff situation? Who holds the key licences? How dependent is the business on you personally? What systems exist? And: why hasn't it sold already?

What to know before buying an existing business in Australia?

Understand the financial performance over at least three years, not just the most recent 12 months. Understand whether you're buying assets or shares, and what transfers with each. Know the staff entitlement liabilities. And assess honestly how the business will run once the current owner is no longer involved.

For more practical content on buying businesses in Australia — including what I'm actually seeing in the market — subscribe to The Leveraged Worker newsletter.

And if you're working through the full process, Module 5 of the Playbook covers due diligence end to end, from the first seller meeting through confirmatory due diligence and into the legal review.