What is my business worth without me?
The short answer
Usually considerably less than you think, and that gap is the single largest value factor in Australian SME valuation. Moving a business from owner-run to manager-run is routinely worth a full turn of EBITDA — on $500,000 of earnings, roughly $500,000 of value.
The test buyers actually apply
What happens to earnings if you take eight weeks off. If the answer is that they fall, a buyer is purchasing a job rather than a business, and the multiple reflects that. It is not a judgement about how hard you work; it is an assessment of what survives your departure.
It costs you twice
First, your labour has to be costed at a market wage before earnings can be capitalised — so a business where you do the work of two people carries a large deduction before any multiple is applied. Second, the risk that customers and capability leave with you compresses the multiple itself. The two effects compound.
It is the most fixable of the value factors
You cannot change your sector and you rarely control the economic cycle, but you can build a management layer, document your processes, put relationships on contracts and move licences to employed staff. Twelve to twenty-four months of deliberate work moves most owner-operated businesses meaningfully up their band.
It also determines what a valuation calls goodwill
Goodwill tied to you personally is not transferable, and buyers, courts and the ATO all treat it that way. Converting personal goodwill into business goodwill is the same project as reducing owner dependence, and it is the highest-return work available before a sale.
The numbers
What owner dependence costs, by earnings level
The same business valued as owner-run and as manager-run, on the same normalised earnings.
Scroll the table sideways →
| Normalised EBITDA | Owner-run at 2.4× | Manager-run at 3.6× |
|---|---|---|
| $250,000 | $600,000 | $900,000 |
| $500,000 | $1.2m | $1.8m |
| $750,000 | $1.8m | $2.7m |
| $1,000,000 | $2.4m | $3.6m |
| $1,500,000 | $3.6m | $5.4m |
Illustrative, using a common spread within a single sector band. Note that the manager’s salary has already been deducted from EBITDA in both columns — the difference shown is the multiple effect alone.
Caveats
The four moves that reduce it
In rough order of value per unit of effort. None of them can be done in the final quarter before a sale.
Who answered this
Prepared by the valuation team at Business Valuations Brisbane, the business valuation division of Asset Valuations Group. Every report we issue is signed by a Certified Practising Valuer of the Australian Valuers Institute. General information only — not advice on your specific circumstances.
- Hire or promote a second in command Someone customers deal with directly and who can run the business for a month without you. This alone moves most businesses up their band.
- Put relationships on paper Contracts and service agreements in the company’s name, with notice periods. Contracted revenue survives the change of ownership; goodwill toward you does not.
- Move licences and accreditations Anything held in your personal name — trade licences, registrations, nominee positions — should sit with the entity or with employed staff.
- Document how the business works Pricing, process, supplier terms and know-how written down. It makes handover credible and reduces the buyer’s perceived risk directly.
Reviewed by a Certified Practising Valuer
Reviewed by Jarrad Khoury, Director and Head of Valuations — Registered Valuer (QLD, Not Limited), Licensed Valuer (WA, Not Limited), CPV and CBV. Published by Business Valuations Brisbane, the business valuation division of Asset Valuations Group.
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