Is This Business Worth Buying? The Preliminary Evaluation Scorecard for Australian Buyers

Evaluating a business for sale in Australia means more than calculating a multiple of EBITDA and deciding if the price is fair. It means working out whether this specific business — with its specific staff, customers, market position, and operational health — is worth your time, capital, and energy to pursue further. Most buyers skip this step. They see a number they like, get interested, request the information memorandum, and then spend four weeks in due diligence discovering problems they could have screened out in forty minutes.

This scorecard gives you a structured way to do that first-pass assessment — before you sign an NDA, before you request financials, before you tell a broker you're interested. It's the "is this worth my time?" filter that should sit at the start of every acquisition process.

Why Most Business Evaluations Start Too Late

The standard advice for buying a business in Australia goes: find a business, request an information memorandum, engage an accountant for due diligence, make an offer. That sequence treats all businesses equally until proven otherwise. The result is that buyers waste significant time and money on due diligence for businesses that should have been disqualified much earlier.

I watched a buyer spend $8,000 on an accountant's review for a landscaping business in Brisbane before discovering — in week three — that the business had two customers accounting for 71% of revenue, both of whom were personal friends of the seller. That's the kind of thing you can ask about in a ten-minute conversation before you ever request financials.

The preliminary evaluation is a different kind of scrutiny. It's not trying to verify numbers — that's due diligence. It's trying to identify structural problems and quality signals that are visible before you get access to the books. Read more about what to look for when buying a trades business for the full context on this.

What the Scorecard Measures

The scorecard has five dimensions, each scored out of 20. A total score under 60 is a strong signal to walk away. A score of 80 or above means the business has passed your preliminary screen and is worth requesting an information memorandum.

1. Revenue quality (20 points) Not just how much revenue, but the nature of it. Recurring contracts score higher than one-off project work. Multiple customers score higher than customer concentration. Consistent growth or stability scores higher than volatile or declining patterns.

2. Owner dependency (20 points) The core question: does this business run without the owner, or does it run because of the owner? A business where the owner holds key customer relationships, performs the technical work, or is the only person who knows how things actually operate is worth significantly less than one that functions independently. See the dedicated Owner Dependency Scorecard for the detailed assessment.

3. Financial health signals (20 points) Gross margin trends, whether the business is profitable after normalising for owner remuneration, and surface-level signs of financial discipline — does the owner actually know their numbers? (You'd be surprised how many don't.) This is a preliminary check; the full Due Diligence Checklist covers the detailed financial verification.

4. Operational resilience (20 points) Can the business keep running through normal disruptions — a staff member leaving, a piece of equipment breaking, a supplier delay? Are there documented processes, or does everything live in the owner's head? Is the team stable, or is there obvious turnover?

5. Market position (20 points) How does this business compete? Price? Relationships? Specialisation? A business with no clear competitive position is more fragile than one that is known for something specific — even if that something is just being the most reliable option in a specific suburb. Geographic concentration matters here too.

This is covered in depth in Module 2 of the Playbook, alongside the full guide to finding a profitable small business to buy.

How to Use the Scorecard

Work through each section based on the listing information, any conversation you've had with the broker or seller, and basic research (Google, LinkedIn, Google Maps reviews). You should be able to complete it in under an hour for most businesses.

The scorecard is deliberately designed to be completed before you sign an NDA or request confidential financials. Some questions you'll need to ask the broker directly — that's fine, and how you ask them is itself useful information about the deal.

Use the Recurring Revenue Assessment Checklist alongside Section 1 if you want a deeper cut on revenue quality.