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GST brings uncertainty to market

UNCERTAINTY about the impact of the GST on retail trade is hurting buyer demand for cash-based businesses, says KE Business Advisory Services’ Anthony Etzine.

Mr Etzine said the reduction in market interest for traditional cash-based small businesses, such as the corner store, could be due to the uncertainty about how such businesses would manage the GST.

“Evidence from around the world shows the introduction of similar goods and services taxes such as VAT in the UK, led to an initial slowdown in small business sector trade,” he said.

“Those businesses that have increased prices to include the tax have tended to see a reduction in trade, while those that have chosen to absorb the tax increases into current prices, experience a negative impact on profits when tax has to be paid.

“Accountability has, more than ever, become vital for those that are looking to sell a business.

“To achieve a good price – or even to attract a buyer – in today’s market, small businesses must be well set-up, with a history of profitable trading and strong operating and financial systems.”

The suburban deli appears to have palled as a business choice, largely because business owners want a lifestyle.

“Market demand is strongest for non-retail businesses such as import, export distribution, manufacturing and service industries, with a business-to-business focus and five-day-a-week operating hours,” Mr Etzine said.

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