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Things to understand when buying a business!

Checking out the business, by getting to know the business’s true financial situation is of the utmost importance, rather than merely relying on the information the current owner is giving out. You need the key sets of profit-and-loss statements going back at least three years, from financial records, balance sheets and accounts to tax returns. You also need to know current fees, advertising fees, how much it costs to train the staff, how much it’ll cost for new equipment if you need it, ongoing fees and whether or not there are transfer fees associated with buying the business.

It’s good to ask why the current owner wants to sell, as they may know something you’re not aware of. So you need to do your research into the industry that you want to buy into and any competitor within a 10-kilometre radius. Get in touch with as many suppliers or previous customers as you can, to get the vibe of what you’re buying into. You certainly don’t want to find out, on your first day in charge, that your cafe has a terrible reputation for dodgy coffee or food, your tech business is known locally as a dud, or your homewares shop has built up an impenetrable barrier of ill will from past poor service.

There are many signs of business being good and healthy beyond the spreadsheet. Among them are features like a loyal and long-serving staff with positive team morale, growing or stable revenue and increasing profitability, steady and controlled expenses and spending with limited waste or unnecessary spending. As well, there will hopefully be plenty of repeat customers, positive social media reviews and high star ratings online. You want good systems and processes to be documented so the business isn’t vulnerable to key staff leaving, including the current owner, and supplier agreements to be in place and in writing.

You also need to check the level of debtors and creditors and ensure that the business doesn’t have outstanding receivables and that the business has a positive cash flow. Some businesses are seasonal especially in tourism, so it’s important to understand industry trends and business intricacies. Taking note of industry trends is particularly important. For instance, a video store might not be such a good investment in these days of Netflix, taxi companies are a tough investment when competing with Uber, and anything that’s not up to the mark technologically is challenging if you’re trying to attract Millennial customers.

When you’re examining a business that you like the look of, imagine yourself running it into the future. It might suit you now, but will it still be a good fit in two, five or 10 years’ time? You might also be happy in your geographical location now but might you want to move later, and would that create huge problems? You need to look at the business in terms of the future, too. Look at the term of the lease, and see how much is left in place with the landlord. Are there any increases in rent coming up, or likely to come up later? And will there be any repercussions when the existing owner moves on? They might have all the licences and certificates and qualifications for their business, which you may not have. They also might not have been drawing a wage from the business, and you might plan to which will affect the net profit, or you might just be an investor in the business so you’ll have to pay someone else that wage to run it. It’s also essential to consider how you might be able to add value to the business going forward, move it in a new direction, or enter other markets. Just as when buying a house, you want to know if there’s scope to extend or improve it, you need also to think about a business’s potential for growth.

Buying-a-business checklist

  • Have all the appropriate due diligence reviews been undertaken?
  • Are net profit margins increasing, rather than declining, year on year?
  • Are BAS and past tax bills paid and current?
  • Are all staff correctly paid, with superannuation contributions current?
  • Are all key telephone numbers, email addresses, websites and software owned by the business and to be transferred to the new owner?
  • Does the business have good mentors, management structures and financial safeguards in place as well as human resources policies and contracts?
  • Does the company have a good pipeline of future business?
  • Is there a current business plan and have there been strategic reviews carried out on an annual basis?
  • Is the business receiving plenty of referral business from current customers and suppliers?
  • Are all licences to operate current and appropriate?

COMMERCIAL REAL ESTATE!

Far Northern Commercial Opportunity Awaits

Cape York often described as a wild adventure north, has now become an alluring opportunity. The tyranny of distance has been considered over for many years by those who live here. Sealed highway and roads, regular scheduled flights, bridged and widened natural roads leading you into unique National Parks, Wilderness coastlines, stunning coastal reef systems, world heritage rainforest and a vast river network. Just off the eastern coast there are numerous remote Marine Park and inhabited islands including Lizard Island.

Cape York is one of handful of places in Australia able to quickly close its doors against this current virus pandemic. On your time off there are a host of playgrounds to enjoy minutes from your home. All without the crowds or the pollution of most cities. If your retirement looms ahead Cooktown and surrounds present ideal opportunities to invest in a small business or tenanted building to retire alongside yet remaining actively engaged without dramas and expense of the average city living.

This unique and character filled freehold property sits in what is considered the ‘sweet spot’ of the high street, Cooktown. A fully tenanted property with lots of opportunity to leave as is 6% ROI, or further develop. Would suit owner-occupiers, developers or investors and could make a top location for an owner operator, boat or auto sales, delicatessen, butcher outlet.

CLICK HERE FOR DETAILS

Cooktown Suburb Report

The size of Cooktown is approximately 2,143.8 square kilometres. Cooktown has 40 parks covering nearly 11.4% of total area. The population of Cooktown (not just the town itself) in 2011 was 2,338 people. By 2016 the population was 2,635 showing a population growth of 12.7% in the area during that time. The predominant age group in Cooktown is 60-69 years. Households in Cooktown are primarily childless couples and are likely to be repaying $1000 – $1399 per month on mortgage repayments. In general, people in Cooktown work in a professional occupation and many within the public sector. In 2011, 52.5% of the homes in Cooktown were owner-occupied compared with 54.1% in 2016. In 2019 the median sales price of houses in the area is $295,000. In 2020 this has gone up to $311,000.

Source Corelogic 2019 | ABS 2019

In the Cooktown catchment area above, in mid 2019 there were a total of 844 dwellings. Total of 99 were newly listed and a average total of 67 currently listed. So different to the general perception, at 99 homes only 11% of total houses are for sale. In late 2019 prices bottomed out and now appear to be on the turn upwards.

Charlotte Street Cooktown
Numbers sold V’s medium house sold price, Start Jan 2014 finish Jan 2019.

Market Activity Snapshot 18/19

2 Bedroom Homes | 11 on market | 1 sold
3 Bedroom Homes | 33 on market | 6 sold
4 Bedroom Homes | 12 on market | 2 sold

4 Buhmann Street, Cooktown, Qld, 4895

Sales in late 2019 and early 2020 indicate the housing market for Cooktown and surrounds is starting to rebound with better median prices as well as sales. Length of days on the market however remains high due to mild demand. Rental vacancies remain very low and weekly rates high. For FIFO workers Cooktown has up to 3 daily flights to Cairns and regular flights to Coen & Weipa so getting in and out of Cooktown is easy. For the family there are two good high schools (1 x state + 1 x private), childcare facilities and a huge natural playground for time off. There are numerous lifestyle blocks available and some very nice family homes hitting the market with facilities to park the lifestyle toys, grow your own fruit & veg, enjoy stunning views overlooking the Coral Sea and room to move without neighbours on the fence line. The Great Barrier Reef Coast awaits!

Cooktown Foreshore | Activity Precinct

Hot Cooktown Commercial Investment Selling

115 Charlotte Street, Cookown, Qld 4895

115 Charlotte Street Cooktown offers as a steady investment freehold property with solid returns and room to expand. The property has three separate tenancies including a national tenant. Hosting Cooktown’s only full operational bank, the well-known Croc shop gift store and downstairs the Wellbeing Centre. Purpose built in 1990 the building is of solid construction, ample off street parking and ideal high street frontage. Located across the road from the historic old bank building on Cooktown’s main street and well frequented due to the ANZ bank and neighbouring bus departure area.

With three long term tenants this investment property offers around 9% ROI with room to grow. The building sits on 936 m2 of land and offers 1 x 77m2, 1 x 95m2 and downstairs 200m2. Each have their own private toilet and bathroom areas.

This investment will offer sound returns, largly self managed and be a stronger performing investment than many other forms or fund holding accounts.

Agent: Hamish Haslop
yours@RealEstateDownunder.com
Tel +61 7 4060 3159

CLICK HERE FOR MORE DETAILS

Cape York a land of unique life styles!

Until a few years ago Cape York was considered by many as off the beaten track. A place for intrepid adventurers, naturalists or those wishing to escape the city to paradise. As road infrastructure rolls further north, access to unique wilderness areas of great beauty become accessible in a conventional vehicle.

With the addition of fast NBN satellite or optic fibre Internet available throughout Cape York many Australians are moving to the region to improve their standard of living away from the distractions of the daily grind in the city. Lifestyle blocks and ocean view acreages offer tropical orchards home grown organic produce, resort style homes with open ended views of the surrounding landscape and the Coral Sea at affordable prices. Great not only for a romantic retirement, also for young families wishing to raise and educate their children in a high standard enabling them to grasp an understanding of how life should be at one with nature.

 The Great Barrier Reef Coast stretching from Cape Tribulation to north of Cooktown offers easy year round access to Cairns airport from which one can travel abroad or nationally with ease. No time wasting traffic congestion around here, working from home has not only become acceptable it is often a preference enabling a true life balance leading to higher individual productivity. After the days end a few easy steps to nature’s wonderland for hikes, sailing, fishing, photography, art, fitness or simply spending time with each other.

Cooktown Waterfront Investment Selling

Prime Waterfront Location

Absolute waterfront location overlooking the mouth of the Endeavour River and Coral Sea. Cavity brick building, built in 2000 on lease hold waterfront land, 16 years on current lease. Provision for new 40 year lease. Potential to install a vessel holding pontoon for reef charter vessel operator.

5 Webber Esplanade Cooktown Qld 4895

Integral position in Cooktown’s Esplanade Master Plan

Spacious upstairs corporate office suite with 180 Degree views and warp around balcony. Patisserie coffee kitchen (cafe) downstairs with wrap around private balcony with ocean views from every table. Downstairs a Laundromat servicing boaties and locals, plus laundry services.

Cooktown Foreshore | Activity Precinct

Picture Cooktown waterfront with 180 views of the Endeavour River, Cooktown inlet and the Coral Sea, a picture that is ever changing. Upstairs spacious corporate office with no imposing infrastructure, enabling the lessee to deck out as they wish, suitable for many business scenarios. Downstairs a Cafe over looking the harbour and a laundromat that has been an integral part of Cooktowns waterfront since the buildings creation in 2000. This is an ideal opportunity for a passive investor to generate better returns than interest on savings held at any bank or volatile share market. Ask for our detailed property brochure. CLICK HERE for more details!

Cape York, Popular Business For Sale.

Lakeland Coffee House & Store

The Lakeland Coffee House & Store announce the appointment of Real Estate Downunder to acquire new buyers for this perfect entry-level opportunity business. Ideal for an investor, family operators or couple to take this business to the next level

This centrally located and financially strong performing leasehold business is in Lakeland Tropical Far North Queensland, has a well-established trading history and returns. The business gives you the opportunity to enjoy a sound income, expand it into a supermarket or leave as is whilst living in an enjoyable friendly region!

Currently run by the owners and supported by staff for the past eleven years. With sound local support the owners have always been community focused. Over this time the region has and continues to grow at a steady pace. A local village population of approx. 230 residence (2011 census) plus 200 transient year round workers.

Lakeland Coffee House & Store makes the perfect entry-level opportunity for family operators. Not your traditional convenience store, it is so much more! Drop in and be surprised by the range of gourmet groceries, on-site roasted coffee, local produce, fill the car with fuel and something to eat for every palette or need.

Lakeland the junction of the popular Mulligan Highway and the Cape York Peninsular Development Road. 242 kilometres NW of Cairns and 81 kilometres SW of Cooktown. A major food bowl and agriculture hub for Tropical Far North Queensland due to the lush volcanic soils abundance of irrigation water due to plentiful rainfall during the summer months. Everyone travelling north or south must go through Lakeland.

The region enjoys steady growth in 2020 due to the ever expanding Banana industry, fruit plantations and newly formed alternative green energy battery stations. The village is named for William Lakeland one of the early prospectors of the Palmer River gold fields from the late 1800’s. Today there is a state school incl. kindergarten, hotel with accommodation, a roadhouse, Lakeland Coffee House & Store, Road Tek depot, additional to many farms, horticulture plantations, packing houses and alternative energy plants.

Hillcrest Guest House, Cooktown, Queensland

Real Estate Downunder are honoured to recently list the historic Hillcrest Guest House, Cooktown. This great little tourism business is right in the heart of the charming historic Cooktown on Queensland’s Great Barrier Reef Coast.

Cooktown is the tropical gateway to Cape York and attracts thousands of domestic and international visitors each year, with the Grassy Hill Lookout being a must-see attraction. Nestled into the base of Grassy Hill and a 500 metre stroll to the town centre is the Hillcrest Guest House.  Pristine beaches, tropical lagoons, waterfalls, and outstanding fishing await.

Cape York is noted to be one of the world’s last untouched frontiers, for many it is on the top of the bucket list. The real Australia. Cooktown is an unspoilt, small historic coastal town surrounded by stunning unparalleled countryside, Aboriginal culture, nicely nestled inside Australia’s Great Barrier Reef.

24th Black Marlin Fleet

With its laid-back atmosphere and friendly people it is a charming place to call home. Cooktown sits at the mouth of the Endeavour River, 267km north of Port Douglas, Queensland, Australia.

If you’ve been dreaming of moving to Tropical Far North Queensland, this sensational business package is the perfect excuse.

Digital business hitch hikers

Tourism operator maintains rate integrity

Not so many years ago tourism operators relied on travel agents, word of mouth and advertising to source their customers. In today’s world we have an ever growing number of online travel booking services, feedback back sites and a digital world that is easy to become lost in. A digital disadvantage is common and something we coined as result of becoming aware at just how many businesses end up this way. It is not just small businesses or those in rural or remote locations, many businesses large and small end up this way through buying an existing business, a change of their operational location or simply wishing to delete a series of poor comments left by disgruntled customers of the business they have just purchased.

The most common mistake tourism operators make is handing all their sales and marketing investment work, to online order takers. This essentially affects their relationship with travel trade partners and their own booking processes in place. Recently whilst consulting to a small resort operator we learnt that they were being bullied by a well-known online booking agent who we choose not to name. The partnership abruptly ended as the resort came to realise the OTA was simply flogging their business as well as that of their trade partners by simply discounting the available product. All whilst stating in the contract terms that the resort was not able to undercut them in the market place, something they themselves were doing to the resort and its distributors. Additional to this, the resort in question was receiving bookings from customers that were not choosing their product because of its attributes or location, or because they wanted to be there, but were simply booking the property because all other nearby online options were unavailable or full so the properties client base changed which was leading to less favourable online feedback. Additionally the B2B distribution of this source lead to the product being misrepresented and often stated as BOOKED OUT when in reality there were plenty of rooms left. The online agent or B2B partner simply had no stock left to sell so directed the client to what their algorithm perceived as comparative products that were nothing of a sort.

As the relationship soured and the staff became fearful of those clients coming from that booking source the resort management made a conscious decision to terminate the contract in question along with others similar and swallow what looked to be a heavy revenue loss. They did so knowing this to be the case and the potential consequences. To minimise the losses strategic action was immediately put into place by remaining with other online agents and reviewing their supply contracts. This lead to stating clearly and enforcing in these supply contracts that no discounting of their product was on offer to club members or casual shoppers of those online sites. The operators were not keen at all, but agreed in order to maintaining the listing revenue. What we all learnt was that these online travel sites were offering every shopper a discount not just members and were changing this discount offer according to the origin of visitors and or bookings. So essentially whatever market the product was popular in, due to the resorts marketing investment, in order to secure more bookings from that market the online agent would tailor the algorithm to attract more customers from those markets. Why was this working? Because many punters want a deal or a perceived better price. 10% off is a substantial lever to make that process work.

Sticking with the new online plan was difficult, but management did so confidently. They had invested so heavily in marketing to those source markets, had great referral lines from in market agents and previous clients that they had to be able to claw back that lost market share. What happened surprised us all? The telephone started ringing again, online and agent bookings again surpassed those taken by online order takers, and the best of all, those that called to make an enquiry would book direct or with their local travel agent. Why? Because the price was the same! Additionally the service and information received through that change was accurate and personalised to their needs. Rate integrity is something many hotels, tour operators and accommodation providers overlook. For those that have no market relationships they have no reason to care. For those that do and additionally invest in their business future by marketing their product through distribution channels and their own online booking systems, rate integrity is paramount!