Looking For a Solid Business for Sale in Sydney? Keep An Eye Out for These 7 Green Flags

by Vanessa Lovie 30th of June, 2022

Looking For a Solid Business for Sale in Sydney. 7 Green Flags

If your looking for a business for sale in Sydney that can give you a solid income, be sure to keep an eye out on these indicators. As the largest city in Australia, there are thousands of great opportunities to buy a business for sale in Sydney but you want to ensure you can afford to live in this expensive city.

1. Solid ROI for the Business for Sale in Sydney

The number one reason a person will buy a company is to make money. Whilst other incentives like flexibility, passion, location and control also play a part, you can't go pass the need for the business for sale in Sydney to deliver you a solid income.

Sydney is one of the most expensive cities in the world and the second least affordable place to buy a home, so if you are going to buy a business for sale in Sydney, you need to ensure it will give you a decent wage.

The return on investment (ROI) is usually a percentage of the time it will take to repay the money you have invested into buying the business for sale in Sydney. Say for instance, you are buying a $600,000 opportunity and the owner is taking home $200,000 a year. This is an ROI of 33% or 3 years. Basically, it will take you 3 years to get back the money you have invested into buying the business for sale in Sydney until you start to earn an income.

It's important when buying a business for sale in Sydney that you have a solid understanding of the financials, what you need to invest, how long it will take for you to get a return on your investment and how much income you will actually take home each week.

A business broker or accountant can help you to review a particular business for sale in Sydney that you are looking at, they will provide professional advice and be able to tell you whether it is a good decision and if you are paying a fair price.

2. Good Culture and Employees

The people who make the wheels turn at any company are vital to its success. Time and time again you hear stories of major companies being sold for thousands more than the valuation, because of the company culture.

The team and employees that work for a business for sale in Sydney can make or break the deal. When a buyer is looking to take over a company, they need to be sure that the team are capable to continue running the operation when the current owner is removed.

Whether the buyer intends to work in the day to day operations of the business or place under management. Good culture and a team of employees can have a huge impact on the business for sale in Sydney. With more millennials buying opportunities they place a high value on the company culture.

So as a buyer, meet the team, and see what is being done to have a positive work environment. Are there weekly lunches? Team building events? What is the current consensus amongst the employees about the business? If the team are happy, this will drive profits for the business for sale in Sydney and as a buyer, this can only be a positive green flag.

On the flip side, if there is a high staff turnover and constant change in management, this is a major red flag. Turning around a company culture will take a lot of work, whilst not impossible your skills as a manager will be tested and the price you pay for the business for sale in Sydney may need to be negotiated.

3. Ensure the Business for Sale in Sydney has the Right Location

Sydney is a big city. It stretches from Hornsby in the north, Penrith is in the west, Campbelltown in the south to Bondi in the East and everywhere in between and around.

There are over 6 million people living in Sydney, which means there are a lot of opportunities to buy a business for sale in Sydney that can service this big population. The importance of the location will be dependent on the type of opportunity and the industry it operates in.

If you are buying a business for sale in Sydney that is in the automotive industry such as a mechanic, courier, panel beater or freight services you need to be in a central location to your clients and suppliers. Easy access to the freeways and allied professions that may provide you with products or services is important.

People in Sydney love to eat. It has a mixture of cultures and many events to celebrate the diversity of food. If you are looking to buy a business for sale in Sydney that is part of the hospitality industry, the most important aspects to consider are foot traffic, an epic Instagram page, a good atmosphere and good parking.

The Hospitality industry has great small businesses for sale in Sydney. You can find all types of opportunities such as a cafe for sale in Sydney or a restaurant for sale in Sydney. To buy these types of opportunities you could be looking anywhere from $50,000 to $800,000 depending on the type, size and location.

So when you start looking for a business for sale in Sydney, don't forget the location. If the business has a good spot it makes it easier for clients to find you and visit. Most people in Sydney have access to cars or public transport and will travel for good food.

4. Good Lease Terms and Agreements

This is key in every opportunity not just a business for sale in Sydney. The conditions and terms of the lease can have a major impact when an owner wants to sell a business. There are a few green flags and things to consider:

Is the lease transferable?
How long is left on the current term?
Are there any rental increases?
Is a fit-out required?

For an opportunity that is heavily reliant upon its location such as hospitality or retail, the value and price someone will pay for a business for sale in Sydney will be affected.

As a buyer, ensure a professional reviews the lease. You want to know what is happening in the future and whether there is anything that will affect your operation. If the lease is ending or the rent is increasing, you need to ask yourself, why? Can you cover these changes and should you be negotiating on the asking price of the business for sale in Sydney?

Solid Business for Sale in Sydney

5. Positive Financial History

This is the only way to tell if a business for sale in Sydney is truly profitable. Experts say to review at least 3 years of financials this includes; profit and loss statements, balance sheets, tax returns, bank statements, loan documents and more. Ensuring a professional assists you during the due diligence process when you buy a business for sale in Sydney is important.

If the business for sale in Sydney is going to be a solid investment, it will have good bookkeeping and a solid financial history. 60% of businesses fail in the first 3 years, so keep this in mind when looking at newly established businesses.

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6. Sydney Business for Sale Should be Pandemic and Recession-Proof

What a hectic 2 years we have had with COVID and now rising inflation. Ideally, a company should be recession-proof though this is hard to guarantee unless you are in essential services such as healthcare or supermarkets. What you can do though, is review how the organisation coped during these turbulent times. If anything, it is a good period to test how resilient the business for sale in Sydney has been. Did the owners pivot and change to cope, or did the opportunity go stagnant?

The more a business for sale in Sydney was able to cope with these difficult times, the more solid an investment it can be.

7. Current Owner is Helpful

When you buy a business for sale in Sydney the current ownership matters. It was their vision and passion that either started the opportunity or built it from a previous owner. When you take over the business for sale in Sydney you will initially be walking in their shoes.

The systems they created, the marketing, the suppliers, the products, and the clients, are all there based on the current owner's vision and the team they have to manage these things.

So as a buyer, meet the owner, do you connect with them? Is there a sense of mutual understanding and trust? You want to buy a business for sale in Sydney that can align with your goals and vision. Whether you come in and completely change the operation, is your decision, but accepting what you are taking on, is something you have to initially process as the buyer.

A training period will usually be included when you buy a business for sale in Sydney, so getting along with the owner is important if you want to learn as much as you can in that training period.

Tags: buying sydney nsw hot city entrepreneurs