Thinking of Buying a Business – Third Step

Assessing The Market.

Businesses are sold in the market.

Markets are influenced by a range of factors, both external and internal. Some of these will include government policies, demographics, economic activity levels, social and cultural changes, interest rates, employment rates, finance availability, technology, consumer confidence and more.

In the shorter timeframe, most influencing factors will be relatively stable in relation to one another. Supply and demand is probably the major feature to be investigated in looking to acquire a business.

Simply, if there are a number of businesses for sale in a particular industry segment, or in a particular location, then competition will be limited and prices will reflect that. Business sellers will have to accept what is offered by business buyers if they want to sell. Occasionally, there may be more buyers seeking a limited opportunity in an industry segment or location than businesses available. Price increases can be expected as a result of competition for the limited opportunity. Business buyers will have to pay business sellers their price if they want to acquire the opportunity.

For example, depending on locations, there is demand for coffee shops at the moment. Supply of good coffee shops is limited and buyers can expect competition. There is limited demand for mechanical workshops and an over supply, particularly of smaller businesses. Sellers will need to reduce their price expectations if they want to achieve a sale. 

Step 3 in buying a business is assess the market closely. Generally, there will be more businesses offered for sale in a location than there are buyers available. Occasionally, Supply will be limited. In circumstances where the supply of businesses of interest to buyers along with the number of buyers actively seeking that opportunity, then sellers can be expected to achieve what they want.

If there are a number of businesses opportunities in the market, then that favours business buyers. If the number of businesses opportunities is limited, that will favour business sellers.

Those buying a business would be well advised to be familiar with the market situation at the time they are looking to acquire a business.

If you need more information or help, please talk to me

Graham Long

0428-649-791

Kevin Lovewell

M: 0401-308-385
E: Click here to contact Kevin Lovewell
Member & Registered Business Valuer
Australian Institute of Business Brokers

Graham Long

M: 0428-649-791
E: Click here to contact Graham Long
Member & Registered Business Valuer
Australian Institute of Business Brokers

Kevin Lovewell

M: 0401-308-385
E: Click here to contact Kevin Lovewell
Member & Registered Business Valuer
Australian Institute of Business Brokers
What others say about Kevin Lovewell

Graham Long

M: 0428-649-791
E: Click here to contact Graham Long
Member & Registered Business Valuer
Australian Institute of Business Brokers
What others say about Graham Long

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