Author: Hamish

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!

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

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.

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

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!

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.