Business confidence is on the rise in South Australia

Have you counted the number of cranes operating in the Adelaide CBD lately?

It seems no matter which direction you turn there is a gigantic crane in use with plenty more in the pipeline. Two more 123m tower cranes go up this week with the start of the new 330 million Adelaide Casino’s expansion employing over 1000 construction jobs. You don’t have to be an economist to realise the amount of money construction spending alone brings into the city, let alone the long-term impact of hundreds of new permanent jobs and increased consumer spending once the building phase is completed.

Adelaide – One of the world’s most liveable cities.

The international magazine “ The Economist” have again ranked Adelaide the world’s fifth most liveable city for the sixth year running. Such surveys are highly regarded, should not be taken lightly and are used as a catalyst to attract new investment and international business partnerships within the state.  The cost base to establish a new business in Adelaide is significantly cheaper than any eastern state city.

Business growth and jobs in Adelaide

CBRE recent South Australian outlook claim the states burgeoning defence, medical, engineering and resources industries are underpinning renewed demand across commercial property markets and that SA’s diverse and stable economy offered favourable long-term growth prospects for investors, developers and tenants. Defence industry related projects are expected to create an estimated 8,000 new jobs over the next 20-30 years. Creative industries such as the South Australian Film Corporation are increasingly attracting international productions using innovative tax incentives, resulting in a demand for designers, digital technicians, 3D animators etc, jobs previously offered in limited numbers.

Another recent report by Deloitte Access Economics released early in the year before the election concluded SA was “doing better than many people realise – much better” and that expectations were positive in key areas: sales, employment, wage levels and business profitability. While there are still concerns regarding tax and energy policy, poor economic management, jobs and population growth, there is a new-found confidence within the state to get on with business.

The trend is up for South Australia!

During the last three months there has been a definite increase in job growth and business investment. International tourism is up as is spending on utilities. If the new Marshall liberal government can deliver on reducing the tax burden, such as payroll tax for small business, it will have a huge impact on South Australia’s SME sector and invigorate investment growth and employment opportunities.   The flow on impacts of dynamic investment in the South Australian economy will further lift business and consumer confidence and begin to reverse the negative population trend that has occurred in recent years.

Ever wondered how much your business is worth?

“How much is my business worth?”

This question is asked by all business owners at various times during the life of their business, but most importantly when they want to sell!

The valuation of any business or company is a challenging task. A few key activities need to take place first. These can include:

  • accounts need to be professionally validated
  • plant and equipment assessed
  • forecasts for future years completed
  • past and present relationships analysed
  • consideration for any brand value established during the life of the business

Methods of appraising a business

Once we’ve gathered the necessary information, a range of proven valuation methodologies could be used. The selection of a particular valuation method isn’t always straight forward, though! Valuation methodologies can be limiting and depending on the circumstances, a mix of methods is sometimes useful.

Determining a figure

It’s common for different outcomes to be achieved depending on the method used and the purpose of the valuation – this is especially true when more than one part is engaged to determine the value of a given business. However, valuations are of little use unless they’re combined with a professional interpretation of the individual results and knowledge of the prices that can be achieved on the market. The theoretical value can differ greatly from the achievable value.

Who can tell me the value of my business?

Partnership buyouts, divorce settlements, finance requirements are several compelling reasons why a valuation should be undertaken by a qualified licensed and experienced business valuer.   However, often a business appraisal completed by an experienced business consultant is sufficient to establish a sale price.

If accounts are up-to-date and reflect the current operation of the business, an appraisal is generally a cost effective and efficient way of determining how ready the business is for market and a suitable asking price.

What happens if the sale price is unrealistic?

For most business owners, selling a business is disruptive to the operation of the business while it’s for sale, and it’s common for the performance of the business to drop while it remains on the market with an unrealistic sale price.

An experienced consultant can use their knowledge of the local market to establish a realistic price, avoiding too much disruption to the business during the time it’s for sale. As Principal of Choice Business Sales and as a member of the Australian Institute of Business Brokers, I’ve developed a practical and goal-oriented perspective. My long history in South Australian business enables me to assess whether a business value is reasonable and whether the methodologies used to establish the market value make sense or not.

Consider local economic factors

South Australia has a unique economy compared to the other states in Australia. If you’re selling your business, it’s important to establish a value for your business that rewards your hard work but is also relevant to the local conditions and environment.

A note to franchisees

Franchise business can sometimes make the mistake of imposing a national performance criteria model when in fact local factors are more relevant. At Choice Business Sales Consultancy, we mesh local experience with globally recognised valuation methods. We understand the local perspective that should be applied to South Australian businesses.

Want to know what YOUR business is worth?

If you would like a no-obligation, free consultation to establish the value of your business, call John Travers at Choice Business Sales on 0439 100 309.