Australia ranks among the top 15 countries list of ease of doing business economies. So, if you’re planning to buy a business in Australia, it’s a great decision! You can enjoy conducive regulations, schemes, systems, and importantly great consumers for testing.
The only thing you need to do is – dive deep and understand the various factors that influence your buying of another business. Here is a list of major factors for your consideration.
What Do You Need To Consider Before Buying a Business in Australia
- History of the business
- Intention of selling
- The clarity in business type
- The Value it creates
- Location of the business
- Legal documentation
History of the Business
This factor plays a pivotal role in deciding whether to buy a business or not. Yes, because some businesses may have successful operations, while others may have a poor public image. Sometimes, a few businesses may have huge liabilities or pending contracts. While others may have good resourceful history without any black marks. Be it positive or negative, it can affect your creditability in one go. Hence, try exploring the past of the business as much as possible.
Intention of Selling
Apart from the history of the business, you need to understand the intention behind selling the business at this point. Of course, there may be obvious reasons which you can easily get to know. At times, you need to do all the digging. One best way to know them is to have meaningful interactions or conversations between you and the legal authority or head of the other business.
Once the conversations get thicker, you can also get to know the mode of selling that the seller intends for i.e.
- Selling a complete business,
- Selling only a portion of the business
Indeed, these insights are crucial for a buyer who’s willing to buy a business in Australia.
The Clarity in Business Type
The major four types of business structures in Australia include:
- Sole trader or proprietorship,
- Partnership business,
- Company or corporation,
- Trust business.
Apart from this, the other types of businesses include:
- Non-profit business,
- Proprietary limited,
- Limited partnership.
Are you having clarity on which type of business structure are you going to invest in? Also, are you focussing on independent entities or franchise-based companies? Try addressing these questions when you chose a business to buy.
The Value it Creates
Every investment deserves a return! When you’re buying a business, you’re investing in it. So, you deserve a benefit in return. Is the business that you’re planning to buy capable of reaping some benefit to you? Check!
For this, you only have to analyze a few aspects such as:
- Latest cash flow statements
- Existing customer base
- Product sales
- Balance sheets/ P&L
- The resources or the assets
Location of the Business in Australia
Buying a business in the CBD (Central Business District) region in Australia has its advantages and disadvantages. At the same time, buying a business out of the CBD region has its pros and cons. So, it all depends on your investment niche, type of business, market opportunities, logistic convenience, etc.
According to the Australian government, legal documentation is something that’s significant in dealing with the buying and selling of businesses in the country.
Here is the list of documentation that you need to obtain/validate from the business you’re willing to buy:
- Business license: The permit to run the business in Australia.
- Agreements & Contracts: The agreement or contract copies whichever is applicable, are in use, or being executed in association with suppliers, vendors, partners, etc.
- Lease: In the case of businesses with third-party people as landlords.
- The resources or assets: End-to-end details of the assets (equipment, fixtures, etc.)
- Financial liabilities: All the financial bills pertaining to outstanding or credit payments.
Explore buying and selling of businesses in Germany, Poland, Singapore, etc here!