Is a Business Analysis Worth It for a $1.5M Business?
The maths, the research, and the four times I would tell you not to bother.
Every owner who calls me asks the same thing eventually, usually about 20 minutes in. They just ask it politely. What they mean is, am I going to spend real money and get nothing back.
Fair question. So let me answer it properly, including the part where the answer is no
Is a business analysis worth it?
For most businesses turning over $1.5M or more, yes, and the reason is arithmetic rather than faith. A business that size is usually running a net margin somewhere between 5% and 10%, which is $75,000 to $150,000 of actual profit on $1.5M of revenue. Most analyses I run uncover $50,000 or more in recoverable profit, and against a base like that, $50,000 is not a nice improvement. It is close to half the profit the business makes in a year.
That is the whole case. Everything below is the detail.
What does the maths look like on $1.5M?
Let's say you are turning over $1.5M at a 6% net margin. That is $90,000 for a year of your life, and you are probably working 55 hours a week for it.
| If your net margin moves |
Your profit goes to | You gain |
|---|---|---|
| 6% to 7% | $105,000 | $15,000 a year |
| 6% to 8% | $120,000 | $30,000 a year |
| 6% to 9% | $135,000 | $45,000 a year |
| 6% to 10% | $150,000 | $60,000 a year |
One point of margin on $1.5M is $15,000 a year, every year, compounding while you own the business and again when you sell it. Three points is $45,000.
Now put a cost against that. Ongoing consulting sits at $3,000 to $4,400 a month with me. A one-off diagnostic is a fraction of that. If the work moves you two points of margin and holds it, you are ahead in the first year and a long way ahead by the third.
I suggest you do that sum on your own numbers before you talk to anybody, including me. It takes about four minutes and it settles the question faster than any sales conversation will.
What does the research say?
The independent numbers back it up, though you should read them with your eyes open because a lot of coaching research is published by coaching organisations.
The most quoted study, from PricewaterhouseCoopers and the Association Resource Centre, found an average return of seven times the cost of employing a coach. An FMI survey found 87% of respondents agreed coaching delivered a high return. On the survival side, roughly 70% of mentored business owners were still trading after five years, which is about double the rate of those without a mentor.
Here is the number I find more persuasive than any of those. Around 47% of Australian SME insolvencies list poor cash flow or financial management as a contributing factor. Not bad luck. Not the market. Numbers nobody was watching closely enough.
You will get your money back if you recognise yourself in these.
Revenue is fine and profit is not. You are busier than you have ever been and the bank balance does not reflect it. This is the most common call I get and it is almost always fixable, because the leak is real and it is sitting somewhere specific.
You cannot tell which part of the business makes money. You have divisions, products or locations and you know the total. You do not know the split. Nearly every business I look at has one line eating the profit the others make.
You have grown past your systems. What worked at $600,000 is now costing you money at $1.5M and nobody has stopped to redesign it.
You are the bottleneck. Nothing happens without you. In 2026, 31.7% of Australian small business owners have never taken a full week off. If that is you, the business has a structural problem, not a stamina problem.
You are thinking about selling in the next three years. Margin and structure are what a buyer pays for. Fixing them 18 months out is worth far more than fixing them during due diligence.
When it is worth it
When it is not worth it
I would rather tell you this now than take your money.
You already know what the problem is. If you can name it, the unprofitable division, the staff member, the pricing you have not touched since 2021, you do not need a diagnostic. You need to do the thing you have been avoiding. Paying someone to confirm it is expensive procrastination.
Your books are two years behind. I cannot analyse numbers that do not exist. Spend the money on a bookkeeper first, get 12 clean months, then call me. Anyone who tells you otherwise is happy to charge you for guessing.
You are in genuine financial distress. If payroll next month is a real question, you need a restructuring or insolvency specialist, not a business analysis. Different problem, different professional, and the timing matters enormously.
You want validation, not the truth. Some owners want someone to agree the market is tough and the staff are the problem. That conversation is available for free from your mates. If you are not prepared to hear that the pricing is wrong or the hire was a mistake, do not spend the money.
You will not do the work. This is the big one. No consultant at any price can want it more than you do. I have watched owners pay for excellent advice and action none of it, and the fault was never the advice.
What I actually did with this
When we bought Aquaduck in 2018, my brain went into overdrive. I spent hours every night writing down the million and one improvements we needed to make. Most of them were not worth doing. The changes that mattered were a small handful, and we only found them by looking at the numbers per passenger instead of per month. Net profit per passenger went up 200%. Direct bookings went from 4% to 47%.
I did not need a longer list. I needed to know which four things on it were the ones.
In conclusion
Do the margin sum on your own numbers first. One point on $1.5M is $15,000 a year.
If you know what the problem is, go and fix it. Do not buy a diagnostic to delay.
Get your books current before you get them analysed.
If you are in real trouble, get the right professional, and get them this week.
If you are busy, profitable on paper and cannot find the money, that is exactly what an analysis is for.
I will tell you on the first call if I do not think you need one.
If you want to know where your business actually sits, the starting point is a Business Analysis. Call me at 0491 729 043, or book a conversation at sarahcolgate.com.au.