Home' The Mirror Central Otago : July 17th 2013 Contents 14
Serving Central Otago for
over 40 years
X Business appraisal and
X Tax advice and
X Financial statement
X Business structuring
X Cash flow projections
29 The Mall
03 445 0616
L2 Brownston House 21 Brownston St
03 443 8717
Looking at buying a business?
The prospect of owning and running
your own business is exciting and New
Zealand is full of people doing just that.
One way of getting into business is to buy one that
is already up and running; in this article I discuss a
range of issues to consider before committing
yourself to a business purchase.
Advantages of buying a business over
developing one from scratch:
The business already has a profile and an
existing customer base.
An existing business will have proven that there
is demand for the product or service it offers.
The business should generate income for you
from the first day you own it.
The vendor should provide you with financial
information about the business enabling you
create a budget to get an idea of how much money
you can expect the business to generate.
Things to consider when buying a business:
Every business is different and each will have
specific characteristics that need to be considered
by a potential purchaser, however there are a
number of things that are common to all business
Is the business attractive to you as a purchaser?
Do you have the skills necessary to successfully
operate the business or can you get access to those
Will the business make money for you? How
does it compare to what you could earn elsewhere?
How competitive is the industry?
Do substitute products or services exist?
Is the business highly dependent on a major
How much money will you have to borrow from
the bank or other sources that will have to be
repaid irrespective of the performance of the
How long are you committed to continuing to
operate the business if it does not go as well as you
had expected (for example have you committed to
a long-term lease of a building)?
Do as much research and analysis as possible to
understand the business before committing to
Considerations in determining the offer price:
Each individual business will have a different set
of characteristics that need to be factored into
the offer price; common considerations are as
What is the value of the business's assets and
liabilities you are buying?
What are the earnings of the business? The more
money the business makes the more you will have
to pay for it.
How much work will you be doing in the
business and what do you expect to be paid for
How much additional money will be tied up in
the business such as in stock and debtors?
What are the growth prospects of the business?
How much can you afford to pay?
The ownership of a business can be very rewarding
from both a financial and personal perspective,
however there are a lot of factors to work through
to get there and by doing as much of this work as
possible before committing yourself provides a
much better understanding of the business and
reduces the risk of problems further down the
- David Stark is a Chartered Accountant at
Mead Stark Ltd and previously worked in
mergers and acquisitions advisory.
Proposal to close Queenstown Immigration Office
Central Otago employers have expressed deep
concern over the proposal by Immigration New
Zealand [INZ] to close the Queenstown office and
relocate services to Christchurch.
INZ has begun a major review of their operations to
provide, in their words, the best possible service to
clients. Upgrading their technology has begun with
processing centres relocated and systems improve-
ments implemented. At a meeting in Queenstown
on June 12 to address concerns raised, INZ advised
there would now be a review of the relocation
proposal to around December 2014 -- January 2015.
Three major concerns have been highlighted.
The first relates to dealing with issues that arise
after the holder of a work visa has gained
employment, which in Central affects primarily our
tourism, accommodation, viticulture and horticul-
ture activities. Employers anticipate delays when
working through a Call Centre.
Work-place experience shows that the after-
employment issues require close consultation with
INZ staff to ensure speedy resolution on a range of
issues. Renewing work visas is one example. Dealing
with local people who understand local matters is
hugely beneficial. Working through INZ staff in
Christchurch is an unacceptable alternative.
The second concern relates to the hugely successful
Trusted Persons Partnership. This close relationship
with INZ and local employers working directly with
all parties enables issues to be dealt with effectively
and speedily. Again, dealing with someone at a
distance will not be as efficient ...which leads to the
third concern. Because of labour requirements in
Central in the sectors mentioned, INZ Queenstown
office has developed a number of 'innovative'
processes. They have trialled systems and
opportunities that the rest of the country has been
able to use to advantage. That opportunity will be
lost to our region if Queenstown ceases to operate.
As we speak to more employers further concerns
may be identified. The Otago Southland Employers'
Association, which represents over 300 employer
members in Central, recommends any employer
who has reservations about the proposal to either
make a submission or contact the Association. The
Association will liaise with Business New Zealand,
and with the local Chambers and our two local
authorities, to take our regional concerns to INZ in
Wellington. Any employer with other concerns
should contact the Employers' Association Central
rep. Don Rhodes, at firstname.lastname@example.org or
- Copy supplied
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