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Discovering the secret to success

THE recent wave of redundancies across Australian industry has led to in an increase in the number of people looking to put their payout into a small businesses venture.

While some are able to make the transition from employee to employer with ease, many others lose their life’s work within a few years.

Chartered accountants Clout & Associates’ insolvency specialist Oren Zohar has seen countless small businesses – paid for with life savings and redundancy cheques – fold, often leaving the employer with no money and little prospect of resurrecting their career.

Mr Zohar said the greatest cause of business failure for these new-found entrepreneurs was a lack of experience of managing a business and a lack of knowledge in the industry they buy into.

“The important thing is that they look into the business properly. They need to do a due

diligence on the business by doing a proper

review of the financials,” Mr Zohar said.

He said it was paramount to seek proper advice from accountants or financial planners.

Small Business Development Corporation chairman John Garland said it was important for potential buyers to approach advisers and undertake training courses, such as those offered by the SBDC.

Business broking firm Goodwin Mitchell O’Hehir director Owen Mitchell said that, no matter how well attuned a person was to understanding business financials, going to an accountant or some other third party not emotionally involved in the decision was necessary to get an objective evaluation of the business.

Once a person is confident in the future of the business, they should still ensure that there was a way out in the event that things do not go well.

“Don’t leave yourself overcapitalised. A lot of people get caught out if there is a downturn. They need to make sure there is enough capital left over once the business has been purchased,” Mr Zohar said.

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