Q: I'm thinking about purchasing a small business, but I have never owned one before so I'm not sure where to start. I'd have a budget of about $200,000, but just want to put my feelers out at the moment. Where do you suggest I start?
* Richard O'Brien, director of
nzbizbuysell.co.nz, replies:
A: Whether it's getting into your own business, changing it or selling up and moving on, it pays to get it right first time.
Buying a business is an involved and often long process, a decision made by thousands of people every year. It is a big commitment and it's important to get it right. If you don't, you stand to lose your savings, your motivation and your health, as it all becomes too hard to get out of bed to do something you've grown to hate.
Owning and running a company takes up significant time, so when searching for a business, perhaps the single most important factor is that it must be something you will enjoy.
Secondly, if you have specific skills then immediately you are adding value to the business, although some skills can be learned on the job or imported.
Regularly check what's on offer in newspapers, although often the businesses advertised don't go into much detail and you will need to get busy on the phone to filter out those that are not suitable.
Be prepared and have a list of key questions. Find out exactly what they are selling, the market, the opportunity, why they are selling and the asking price.
Trade journals and magazines are another place to look and will, in some cases, run a section on business opportunities.
If you are seeking something specific, get to know the appropriate associations and let them know you are interested. Look to advertise for what you want - ask your accountant or anyone else who may have contact with potential business sellers. And be patient - identifying the right business can take time.
Consider contacting business brokers such as Harcourts, Harveys or Businesslink who work in your area of interest. Brokers are often used in selling businesses; they will be happy to discuss your needs and will generally have several businesses for sale at any time. Some specialise and will be able to offer industry advice and opportunities.
Remember that the broker works for the seller, and that the better the sale price, the better their commission. Visit several brokers to gain a complete picture on what's on offer in your area of interest. No one broker will hold all the options. Develop a network with key operators who can help you and make sure you brief them well on what you are looking for.
NZbBizBuySell is structured to help buyers make the right choices. It provides information on buying businesses, directories on professionals who can help, and a section that specialises in franchises, a growth sector for local business.
The internet is a great source of information for visitors looking for help. Buyers and sellers want good information and smart tools, provided at the click of a button.
With more than two million people having access to the internet, results of buying and selling businesses are encouraging. Alison Hollis-Burke, of Wellington, was quick to sell her service-based business and says that after putting up an ad she received an inquiry that quickly resulted in a sale. Before this she had been advertising for six months.
Sites such as nzbizbuysell, prosale and aorata aren't just for New Zealanders, as Bruce Liddell from South Africa says. "It's a brilliant service for people wanting to buy a business in New Zealand but are living overseas."
By visiting internet sites, buyers benefit from information on buying businesses, including such sections as self-assessment. They can search for opportunities throughout New Zealand that are well specified and in their area of interest, and can get monthly bulletins on latest opportunities.
Sellers, on the other hand, get continuing online exposure and are able to promote their business to a much greater and more qualified market. Useful online resources and opportunities can be easily searched for free by buyers. The internet is there every day catering for motivated buyers and sellers or people like you wanting to peruse businesses for sale.
Business Broker
For more information contact Richard O'Brien
Phone: 03 337 0005 or 0274 469 249
E-mail Richard
* Email us your small business question
<i>Business mentor:</i> First-time buyers must make the right decision
Q: I'm thinking about purchasing a small business, but I have never owned one before so I'm not sure where to start. I'd have a budget of about $200,000, but just want to put my feelers out at the moment. Where do you suggest I start?
* Richard O'Brien, director of
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