CAN’T WAIT FOR “CAN DO”
New Buyer enquiries have been lower than average since last September. That was the time of the Federal election and the prolonged period of establishing a new government. Then the RBA, on Melbourne Cup Day, placed another increase on the base lending rate.
This took away any positive thoughts from Buyers in much the same way as it has affected the main stream retail businesses. Since then we have had a series of natural disasters and the depressing performance of the Australian Cricket team losing the Ashes to England! There are now some economists predicting a fall in interest rates.
All in all, there hasn’t been much to smile about and, looking back, we have had a tough time for over two years. Here on the Sunshine Coast, the tourism industry has been hit hard by the GFC and recent climatic events (even though we missed the floods and cyclones). Any disposable dollar has been lost to increased rates, electricity and petrol. We are not seeing any benefit from the ‘so-called’ boom. I have also been informed that quite a few Victorian migrants are returning to their home state. This information backs up our experience of lower Buyer numbers.
I wonder whether this move has anything to do with the change in State government from Labour to Liberal. If so, we might see further returns to New South Wales in the near future. I, for one, can’t wait for “Can Do” Campbell to bring some confidence back to Queensland. There are already signs of a more positive attitude experienced by the retail industry and at least there is now some light at the end of the tunnel. The Sunshine Coast has been patently ignored by the incumbent government and many locals are also disappointed with the performance of our new local council. A change to Local, State and Federal Government seems highly likely, which will bring a positive shift in confidence.
Be that as it may, we have seen more “potential sale” businesses recently that are trading profitably and growing in sales. See latest listings for details on some very exciting opportunities.
TIP: If Buyers can find a reliable trading business in this economy then it surely has to be a good investment at the bottom of the cycle. Now is the right time to buy a quality business where the sale price will be based on a suppressed trading performance capitalized by a lower multiple.
THE PERFECT BUSINESS INVESTMENT
A perfect example of a quality business is one of our recent listings. In 2000 we sold a property services business for $300,000. It was turning over $800,000 per annum and showing a net profit to Owner Operator of $145,000. The same business is now for sale with a turnover of $2.1million and a net profit to Owner of $380,000. Our asking price is $820,000 + SAV. This business has increased its sales and profits, consistently every year, including in the last few years of GFC. It has not only increased substantially in value but has also provided a good income to the Owners, which has allowed them to pay off borrowings and add to their superannuation fund along the way. What more could you ask for? Within seven years of ownership the Owners were earning more per annum than the business cost to buy. That’s what a quality business will do for you. This business went under contract within 10 days of listing.
Economics, Commodities & Markets Q1 2011
We were pleased to receive a very comprehensive report on the Global Economy from Gary Waterson ANZ Maroochydore. For various reasons we are not allowed to attach the report to our newsletter, but if anyone would like a copy please contact Gary Waterson on Telephone: +61 7 5479 9128 or Email:
Why we feel smarter after a few beers!
One afternoon at Cheers, Cliff Clavin was explaining the Buffalo Theory to his buddy Norm.
Here’s how it went:
“Well ya see, Norm, it’s like this. A herd of buffalo can only move as fast as the slowest buffalo. And when the herd is hunted, it is the slowest and weakest ones at the back that are killed first. This natural selection is good for the herd as a whole, because the general speed and health of the whole group keeps improving by the regular killing of the weakest members. In much the same way, the human brain can only operate as fast as the slowest brain cells. Excessive intake of alcohol, as we know, kills brain cells. But naturally, it attacks the slowest and weakest brain cells first. In this way, regular consumption of beer eliminates the weaker brain cells, making the brain a faster and more efficient machine. That’s why you always feel smarter after a few beers.”