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Classicman

Finance options for buying a Business in Aus

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Classicman

Hi

I am contemplating buying a business when I move to Canberra instead of climbing back into the corporate hamster wheel. I am looking at a business which I quite like and can "afford" to buy. Can anyine please give me advise on how business finance works in Australia? I don't want to tie up all of my cash if I can help it.

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DanieR

My intention is not to burst your bubble as I admire an entrepreneurial spirit. I do however feel that I should share my personal experience in this regard.

Buying or starting a business is extremely risky in the economic times we are living in. Doing it in a country where you are not yet familiar with the customs, regulations,buyers trends etc. increases this risk tenfold.

I suggest you spend at least the first year or two doing anything that provides a stable income and utilise the time to get to know your new surroundings.

Only then should you consider such possibilities.

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Classicman

Thanks for your advice. The business I am intersted in is a very profitable one and the owner has agreed to stay on for a substantial period to teach me the ropes and faciltate a mutually beneficial handover. An entrpreneur is by nature a risk taker, and I am fairly confident that this will be a calculated risk with a very good chance of success. The business is also aligned to my passion, hobby and career goals, so this alone will be half the battle won.

Having said this, I do understand that there is a different culture and way of doing businesss to learn. I belive that I am flexible enough and committed enough to make this work. So, no, you haven't burst my bubble, and I still need to find out about business finance :-)

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Lyn

Canberra business's are not in a very good place right now and I would strongly urge you to check those balance sheets - but you know that - just this week there were "crisis" talks by the chamber of business. We have run our business here since 2010 (HVAC) and times were good, but these last three months have seen our sales drop by 50%. Our colleagues at our networking group all saying the same. No one seems to want to spend in this economy. And those in the know are predicting it is going to be like this for another two years.

My post is not to discourage you, entrepreneurs are risk takers, my husband is one - but to rather just give you a heads up on the situation in Canberra. If you had posted this 1 year ago, I would have told you to go for it, but right now I just feel I need to let you know how it is. Use it or lose it.

If you want to share what type of business this is I would be very interested to know who is coining it - you don't have to mention the name. Just the industry. :blush-anim-cl:

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MichaelM

Hi Classicman

There are various small business grants offered by state and the Federal government. You have to meet some criteria though. You may want to try these.

Below is a link to the Grants and Assistance finder http://www.business.gov.au/BusinessTopics/Grantsandassistance/Pages/default.aspx

Hope this helps

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Classicman

Hi

I'm bumping this topic because I'm leaning towards this option again. The original business I was looking at has since been sold. I see that there are a lot of "profitable" coffee shops for sale and Canberra has been touted as a Coffee Society.

Are businesses still struggling in Canberra? I would imagine that anything to do with food or drink would be a safe bet as everyone needs to eat and drink.

Opinions?

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KalahariHarry

I Would also be keen, to get into my own busniess but as I have just sold a business in CT, I will go and work for someone first and get to know the ecomony as I agree with DanieR above. Also having had my own business, I look forward to being able to "put in leave' and just "go to work and do my job" rather than the stress of owning.

I'm sure in the longer term I will again look for a business. Best to play it safe for now, but very interested in the responses.

trev

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Toitjie

Classicman - I tend to agree with Lyn. Im not here as long as she has been and I dont have a business but the economy is strained and Canberra is really very small.

I had a restaurant years ago in South Africa and I swore never to go into that business again. I dont know if Canberra is tauted as a coffee society, I have seen coffee shops here and there like Gloria Jeans but I dont think it compares to the coffee society you get in Melbourne for instance. Remember Canberra is extremely big in terms of land size, but there are only something like 375 000 residents in the whole of Canberra.

There are a lot of restaurants and all sorts of coffee and eatery places, like the Civic in the CBD. So it might be profitable, but it might not. I cant say as I dont get there often. But I would also urge you to be here and see for yourself before making a decision

I wish you all the best. I admire the entrepreneurial spirit greatly

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Classicman

Either which way you look at it, it is going to be tough.

Finding an Executive Job to replace what I am currently doing looks as though it is going to be difficult in Canberra. I am aware that I will have to take a few steps backwards, but I have a family of six that I need to support, so it is either struggle for a job and/or settle for a lesser job (both ways I will eat into my Capital)

OR

Invest in a business that can pay what I need to survive and hopefully grow my investment. The nice thing about some of these coffee shops (if the books are to be believed) is that some of them have captive markets (located in Govt office blocks) and only operate 5 days. They can be run with a Manager, so the profits will be less, but they will also allow for a passive income.

Food for thought.......

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patrice

Nick

Some more ‘food for thought’ …

Hypothetically, if I had a successful and profitable business, and if I could see the business cycle downturn ahead (know what’s going on locally) – well then I too would be selling my business – while the numbers and balance sheet still looked good.

Risk needs to be managed – I believe if it looks so easy, or if it sounds soo good – well, that’s when I would worry , wondering why is everyone not doing this, why are they selling, why, … why …

Taking an interim ‘lessor’ job need not necessarily mean you eat into your capital, it may just mean you eat less ;-)

(edit) but the lessor job will buy you time to do the research, get to know local markets, conditions and business sentiment / outlook - to make an informed and risk managed decision ....

my 2c......

Edited by patrice
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DanieR

I worked in Australia for different Business Brokers, both in WA and QLD and I feel it is my responsibility to warn fellow Saffas to be EXTREMELY cautious in buying a business prior to living and experiencing life first-hand in Australia.

I have a business of my own and have a passion for the entrepreneurial spirit but you have to plan properly. There are certainly many successful Saffas who run their own businesses, but I have also personally witnessed heart breaking stories which could have been prevented. Some of these people lost everything they had before their new lives even started!

Step one is to make a living doing anything if necessary, and save some $$. Step two is to learn as much as possible and to keep your eyes open for low risk opportunities. Step three (after at least a year or two) can be to start or buy that right business!

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Sunnyskies

I don't own my own business but from what I've seen I would caution you about buying a business that you have no knowledge about. In particular I would be really careful about buying a coffee shop. There are a lot of coffee shops and people will easily walk a few extra metres to get to one that they perceive as good versus the one in their building.

Unfortunately, IMO I don't think that South Africans really know what good coffee is (as coffee in South Africa is not great) so you will need to hire a good barista. The other thing that makes or breaks coffee shops is the banter with the staff and whether your food is any good. Coffee shop sounds easy but it isn't, and I've seen people buy great coffee shops and not be able to maintain the standard or personality and soon lost the trade.

friends of ours bought a franchise fast food joint inPerth and had success. But they worked incredibly hard for the 2 years that they had the shop and I don't think they can look at a noodle the same way again.

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liesl7

Hi guys, interesting thread...

We have applied for a Sub class 188, business innovation visa, with WA state sponsorship. If buying or setting up a business in Aus, was your only means of going, would you still advise someone not to do it?

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Bronwyn&Co

Hi guys, interesting thread...

We have applied for a Sub class 188, business innovation visa, with WA state sponsorship. If buying or setting up a business in Aus, was your only means of going, would you still advise someone not to do it?

That was our case too. SS business visa 163 (now obsolete) to South Australia. We had no trades or degrees, only business experience. I can honestly say it was very difficult, the business did not pay us anything and we survived on spouse income and (mainly) income from our South African business which we had kept under management. I don't know what advice to give you because it is very difficult. I don't know if I could face that again. I think we would have used my hubby's British Passport & gone elsewhere to be very honest. It will depend a bit on your age, nest egg (if any) and capacity for risk. Edited by Bronwyn&Co

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liesl7

Hi Bronwyn

I have heard the same from many people.

Aren't you Charmain and George's friends?

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Bronwyn&Co

Hi Bronwyn

I have heard the same from many people.

Aren't you Charmain and George's friends?

Lol yes. Did we meet at their house? Hehe small world.

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liesl7

Hi Bronwyn

Yes, we did. We were there April 2013.

How are you?

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Bronwyn&Co

Now I know exactly who you are!! How are your boys :) so cute! Ok I better sleep, school run in 6 hrs but we can maybe chat on pm. I don't really have much advice. Knowing your business interests, if you stick to the stuff you know & are good at, you will have a better shot than most people. X

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HarryVR

I worked in Australia for different Business Brokers, both in WA and QLD and I feel it is my responsibility to warn fellow Saffas to be EXTREMELY cautious in buying a business prior to living and experiencing life first-hand in Australia.

I have a business of my own and have a passion for the entrepreneurial spirit but you have to plan properly. There are certainly many successful Saffas who run their own businesses, but I have also personally witnessed heart breaking stories which could have been prevented. Some of these people lost everything they had before their new lives even started!

Step one is to make a living doing anything if necessary, and save some $$. Step two is to learn as much as possible and to keep your eyes open for low risk opportunities. Step three (after at least a year or two) can be to start or buy that right business!

Spot on DanieR!! I arrived in Australia in 1997 and joined a business, which I worked at for the next 18 months. At the end of 1999 I was offered the opportunity to buy the business. I realised had I done it at the word go, my knowledge and experience of how Australian businesses are run, would have been completely lacking. Now, 15 years later I don't look back and it has been the best thing ever. I built up the business, expanded and improved the level of service offered, then sold it in 2009 for a substantial profit. My 2c worth, but I'd take the advice from people in the know of the local market!

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RYLC

Local knowledge is soooo important.

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