Published on 02/09/2021 by Any Business.Com.Au

Has the Covid Catastrophe Brought On Business Opportunity?

Despite the obvious disadvantages associated with sporadic yet consistent lockdowns, might now be the right time to buy a business?

With the doors continuing to close on a number of Australia's pandemic pummelled small businesses, you'd assume the answer might be a resounding 'no'.

But while there's no denying the current economic situation; recent sentiment suggests that both business buyers and sellers are still well in the market.

In fact, due to job losses and employment instability, a number of people are taking the opportunity now to become their own bosses or to pass the torch onto the next generation of budding entrepreneurs.

So should you get busy buying a business? Let's find out.

Covid prompted retirement

While the pandemic has led many people to find gaps in the market and launch their own ventures, many others have taken the opportunity to retire and move on their businesses to hungrier entrepreneurs.

According to recent research, the pace of retirement has accelerated considerably in the past 12 months.

What's more, with the current covid climate affecting all businesses, the price may just be right, right now.

This is especially true for more established smaller businesses with sales of under $10 million, as low as $1 million (for service companies) and $2 to $4 million (for businesses with inventory and fixed assets).

Is this the calm before the storm?

If you're looking to buy a business that will take advantage of the influx of newly vaccinated people looking to dine, shop and travel, now is the time to start your search.

Vaccination rates and state regulations are almost certain to affect your decision to buy but it shouldn't effect every acquisition.

If you're looking to purchase a restaurant, for example, which may not have the ability to operate fully for at least two to three months, it's best not to wait. If you're looking to acquire a software or online based business, getting a deal done is a bit less time sensitive.

Sentiment says, if you're interested in buying, it's best to get your ducks in a row now.

Motels a great place to start

Motels are one component of the accommodation industry offering a mixture of income and cashflow driven options.

With a number of businesses experiencing declines in revenue throughout the Covid environment, savvy operators have been able to re-position, re-evaluate and in many cases update facilities during the down time - making them ready to go assets for what we hope is a grand re-opening of tourism.

Motels have continued to sell throughout the Covid period and even more so in recent times, with returns in country locations of up to 40% in some instances and almost 25% along the coastal regions.

Tourism in Australia

Tourism is a significant economic driver in Australia and accounts for 6.8% of employment in Victoria and accounted for 5% of the Victorian Economy in the 2019-2020 year. Similar proportions apply throughout the country.

With Covid restrictions essentially eliminating the world's ability to travel too far (if at all) are we in line for a tourism boom once the world re-opens?

Data from Tourism Research Australia's International and National Visitor Surveys show that we might just be and that now might be the opportune time to capitalise.

According to figures, in the year ending September 2020 NSW's North Coast (currently Australia's most popular holiday destination) welcomed 10.9 million overnight and day trip visitors (down 26.4% year-on-year) who generated $3.6 billion in visitor expenditure (down 26.8% year-on-year) for the local visitor economy.

Prior to the pandemic, (the year ended December 2019) the North Coast received 15.3 million overnight and day trip visitors who generated $5.2 billion in visitor expenditure.

The most recent statistics show that 70 percent of the visitors to the NSW North Coast now come from within the state.

So what does that mean for when things open back up (whatever that may look like)?

If the numbers are anything to go by, it could mean that those who manage to get into the accommodation business now, while trading is essentially slow, could be in for a busy (and fruitful) time once tourism bounces back.

Industry leaders believe huge opportunities currently exist, so if you're considering becoming a business owner, now's the time to get the ball rolling.

AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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