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Why buying an existing small business could be your ideal startup opportunity

As Australia moves into the second quarter of 2021, there remain mixed messages for those looking to start their own business. While the long term impact of transitioning from government assistance is yet to be seen, most commentators are predicting bad news.

While unemployment figures have been dropping nationally, those numbers are largely skewed by Victoria coming out of the most severe of lockdowns. Elsewhere, growth is weak or even negative. With the removal of JobKeeper last month, even if businesses don’t cut staff – and many may be forced to – the extra burden of paying full wages could place a massive strain on small business owners nationally.

So why would anyone look to start a business for themselves in this economy?

Well, it’s not all doom and gloom. With every monumental event – a one in one-hundred-year pandemic, for example – sweeping changes to the way people live their lives create opportunity for entrepreneurs.

Businesses that have successfully pivoted to account for remote working, companies that have slaked the thirst for more connectivity in trying times, or simply management that redesigned their business model, have thrived during the COVID-19 outbreak and periods of lockdown and social distancing.

Yet so many other small businesses refuse to change. Change can be scary for owners who have so long held onto their “recipe” for success that they spent the last year just hoping that things go “back to normal”. Without a vision of how to adapt, they are struggling.


And that’s a huge opportunity.

Why buying an existing business makes sense

Many of the challenges faced by the tens of thousands of Australians creating a new business each year can be mitigated if they consider; “Is buying an existing small business the ideal start up?”

By buying an existing business, you can bypass a lot of the early headaches of starting out on your own. Where do I get a client base from? Where can I acquire premises? Where do I find skilled staff? Most importantly, an existing business has already paid the cost of capital investment. As most start ups go out of business because they run out of runway money, buying an established company instead mitigates risk.

When investing in an existing business, you look to acquire the assets of the business – be that expert staff, good-will, machinery or a lease – while bringing your own way of doing business.

It’s a buyers market as baby boomers look to retire

Pre-COVID, there was already a demographic time-bomb of business owners closing in on retirement age starting to look for an exit strategy. The tribulations of the last year have exacerbated the rush to retirement for many of these owners and it’s a buyers’ market. As small businesses account for 44 per cent of Australian employment, strengthening that sector is also vital for the recovery of the economy.

So why aren’t more of us doing our due diligence and preparing to buy?

The most common reason offered is money, or rather, a lack of it. It’s all too easy to assume that only someone with significant funds to invest is in a position to buy a going concern. That’s simply not true. With Special Purpose Vehicles for finance and buy, considering different options that exit the existing owners from the business, using future profits of that business, anyone who is serious about getting into business for themselves can do this.


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