THE impression one gets when talking to clients is that it is the overriding obsession of most Australians to buy a small business and use that as part of their superannuation arrangements.
Yet statistically we can identify the following trends in small business.
If 40,000 new businesses were commenced tomorrow:
• 12,800 (32%) would fail in the first year
• 6,600 (17%) of them would fail in the second year
• 5,200 (13%) would fail in the third year
• 2,800 (7%) fail in the fourth year
• 2,000 (5%) fail in the fifth year.
These frightening statistics would generally be sufficient to convince even the most foolhardy to avoid the trap of buying a small business. Despite this, the Australian Bureau of Statistics inform us that according to their definition of very small businesses (i.e. less than five employees), there are 666,900 in Australia.
Starting or buying a small business can be a particularly daunting task. Often the buyer is coming from an industry outside the sector to which they are moving.
In recent times it has also become more common for redundant public service employees to buy a business in order to secure themselves a source of income.
Seeking advice from groups such as the Small Business Development Corporation, legal experts and knowledgeable writers may help to stop the new Australian dream becoming a nightmare.
