Market Report September 2015


The market for businesses still remained strong across most sectors this calendar year. 
Food and Beverage has been in strong demand, with over 43% of sales coming from that sector since January 2015, and the strongest ‘band of interest’ being in businesses below $100,000.  
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MARKET REPORT September 2015

The market for businesses still remained strong across most sectors this calendar year. Food and Beverage has been in strong demand, with over 43% of sales coming from that sector since January 2015, and the strongest ‘band of interest’ being in businesses below $100,000. Good volumes of buyers are seeking Cafes, Takeaways, Restaurants and Convenience Stores on the Sunshine Coast, with demand continually outstripping supply at several price points under the 100K mark. Good sales of Homebased, Service, Wholesale/Import, and Construction/Manufacturing type businesses have also been recorded over the past few months. Generally, those businesses with good financial records and sustainable earnings have been well sought after by buyers across most sectors. The general feel across brokers within the firm is that buyers at higher price points in the market are starting to ‘get off the fence’ and are actively looking for businesses netting over 200K.

We have seen buyer enquiries derived from internet marketing campaigns come from locals, interstate and overseas at a rate of 200 to 300 new enquiries per month at Verified Businesses. This interest comes in many forms and for many reasons, from those wishing to fulfil visa requirements, to individuals and families moving out of mining sector jobs into small businesses on the coast to escape FIFO work arrangements, or life in outlying regions. Interstate migration also continues with buyers seeking businesses to enable a move to the coast from WA, VIC and NSW. The common theme for many of these buyers revolves around lifestyle benefits, the local climate and the new housing estates the region has to offer along with increasing infrastructure in education and medical facilities. A better environment to bring up a family in, and of course the idealism of a sea change by moving to Queensland’s Sunshine Coast also still seem very important. Most look to buy a home and a business on the coast for the above reasons.

With the exchange rate of the Australian dollar down, and a long summer looming full of magnificent weather, many local ‘buyers and investors’ along with those wishing to move to the coast,

are seeking ‘Food and Hospitality’, ‘Homebased’ and ‘Service’ type businesses in coming months. These buyers have likely been looking around the market for a little while now, generally know what they are looking for in a business, and wish to capitalise on the natural influx of visitors with money to spend, which hits the Coastal local economy during peak times. In some cases, buyers facilitate their move to the area through buying a business first; these are mostly cash type buyers of businesses, while others may buy a home first then look for a business.

At Verified Businesses we have over 4,000 business buyers on our database, and are consistently dealing with good numbers of pre-qualified buyers across all sectors. These buyers generally know what they want, and are ready to purchase the right business when it comes along. The problem is, we haven’t always got enough quality businesses to fill this demand instantly. Generally, those businesses with sustainable net profits of over 200K p.a. for one working owner are in high demand right now, along with businesses that have moderate to low owner involvement and net profits of over 150K. If a business is well sought after at any level in the market by two or more buyers who are chasing that particular business, then premium prices can be achieved. However, correct price positioning when a business hits the market for the first time is still crucial. Incorrect pricing can stifle the new enquiry of hot buyers who are ready to buy and are educated on the market, which is what we want to avoid as professional brokers. This is because, even if we have buyers on our database which are great candidates for a particular business, the best strategy is to also attract ‘new enquiry’, so as to have as many buyers as possible competing for a business.

During periods of low inflation, low wage growth, low capital growth and low interest rates, owning a successful small business is still a proven way of creating wealth, (Jarot’s Guide) and many buyers out there know it! Much has been said about a looming oversupply in the market as baby boomers retire and exit their businesses in masses in coming years, but as yet, that just hasn’t happened. At present, solid businesses still achieve good selling prices, and are in strong demand and short supply. Rather than retiring, there is a re-emergence of the trend of selling businesses and re-investing/or upgrading to other businesses, along with those who buy, improve and repeatedly sell businesses every 1-3 years. As we approach the end of the year, ‘Now is a great time to list a Business for Sale’. Many buyers will be seeking to re-establish themselves on the Coast through owning a business in the New Year. Therefore, many contracts usually settle during this period. Business owners genuinely interested in selling their business, should give us a call for a free business appraisal and we can help confirm the likely outcomes in selling. This can help business owners plan future exit strategies, and help reinforce decisions on selling or holding their businesses.

CRAIG CAMPBELL Principal Verified Businesses.

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