STRONG DEMAND FOR SMALL BUSINESSES

Wilsons Business Brokers is currently experiencing an increase in enquiry from persons wanting to buy solid small businesses. These buyers are predominantly individuals who have been retrenched or lost what has been their normal source of income. They are all intent on finding a solid income stream; some are looking to be active for 4 days, some 5 days, and others 7 days. Of course they recognise that a business working a shorter week to make the same income as a business working 7 days will cost more to purchase, but for some, lifestyle is an important consideration whilst, for others, the opportunity to generate income is paramount.

The difficulty being caused by this new demand is that there is an ever increasing scarcity  of good small businesses for sale. It's not that long ago that unemployment was at a very low level and finding staff to work in a small business was difficult. Well, how things can change. Here we are now with increasing unemployment becoming one of the hottest issues confronting society.

The amount of capital available to this new wave of buyers is often relative to their age. The younger ones tend to have smaller amounts of capital available to them, whilst others who might have thought they have 5 or 10 years of work left in them have had the opportunity to amass some wealth. However in recent times, because of the downturn in the economy, they find their investments in property and shares have come under attack and instead of retiring early think it better to use some of their retirement funds to buy a small business and continue to amass wealth. Equally, owners of small businesses who were planning to sell their businesses and retire are reconsidering their plans. The problem confronting them is finding a safe investment that will provide a reasonable return on their capital once they sell their businesses.

It's not easy out there in the investment market with the vale of property and the value of shares under threat. Business owners are now tending to stay on in their business rather than sell them and this is affecting the prices being achieved in the sale of good steady businesses. Unlike most other investments, the value of proven, established businesses have remained steady or, if anything, slightly increased because of the lack of supply in a market with strong demand.

The larger businesses are also in demand. Bigger businesses, including some public companies that are cashed up, are in a wonderful position to acquire existing businesses that offer the opportunity of improved profits through the synergies of amalgamation and the economies of scale. Some of these businesses are being amalgamated so as to operate under the one team of management. Others that offer the opportunity of integration and security of supply are being left to continue to trade as independent entities.

The recent fall in the value of the Australian Dollar, compared to the US dollar, has created bargain opportunities for business acquisitions in Australia by American companies and individuals.

Business of the Moment

Business of the Moment

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