Buying a Business in New Zealand

by Richard O’Brien – Director of Business for Sale site nzbizbuysell.co.nz

New Zealand is a great place to be in business. The 2008 World Bank survey ranked New Zealand as the number two country for ease of doing business, second only to Singapore. If you’re looking to start, buy or invest in a New Zealand business then you will need to check out how best to obtain your New Zealand Business Visa and commence the journey.

Owning and operating a business often takes up a significant chunk of your time, so when searching for a business, look for something that you will enjoy doing. Secondly, if you have specific skills then immediately you are adding value to the business – although some skills can be learnt on the job or imported.

Before embarking on the process of buying a business, there are a number of things consider. 

Are you ready to own a business?

Build a profile of the key things you enjoy doing and your strengths – your ideal business will contain many of these. Also list the things you don’t enjoy doing and any weakness. When you are looking, you will be asking yourself; is this something I'm interested in? Have I the appropriate skills, knowledge, and ability? If not, are these available within or outside the business? Determine how much you are prepared to risk, the hours you will work, and its impact on your lifestyle. Write these down, they will help you stay focused in searching through the many possibilities. Find out if you are a business owner ready.

Why buy an existing business?

Statistically a large number of start-up businesses fail, with those surviving often being sold to have their new owners make the real gains. So let the hardened entrepreneurs take the risk, develop the market, and find out what works and what doesn't.

In buying an existing business you are getting;

  1. An existing customer base which means cash flow from day one.
  2. Products and/or services that have already been developed, trialled and proven.
  3. Experienced and skilled staff who understand the business and it’s customers.
  4. Operating Systems that keep the customers coming and the cash flowing?
  5. History where you are able to see the financial records, it’s cash flow, sales and expenses.

It always pays to look at a number of business for sale opportunities, so you get a feel for the market and know what to expect from having done your homework.

How much will I need?

This will be determined by your ability to manage the businesses monthly cash flow, your cash reserves, the equity you may borrow against, and potentially the bank or vendor finance. Exercise care in not taking on too much debt, and ensure you allow for working capital and some cash reserves. The best position is to reduce your risk. Don’t spend the lot, struggle to keep things afloat, and then risk loosing it all. Exercise common sense, spending less will reduce your risk. Develop a budget for buying a business that best suits your needs.

When purchasing any business always seek professional advice. For further details visit NZ Business for Sale website

If you would like to obtain a Comprehensive New Zealand Visa Evaluation to see if you would be eligible for a business visa please contact us.