New Year, New Entrepreneur?

By Joe Smith

At this time of year, is it likely that most people will be starting the year with a fresh slate.  Some will have personal goals or maybe even be looking to go into business for themselves.  A recent study has found there are some decisive factors in becoming an entrepreneur and also points to the requirement of having three character traits – being independent, trustworthy and hard working.  If this sounds like you then please read on!

One interesting finding of the study was that less than 25% of entrepreneurs researched mentioned money as a motivating factor.  The desire to be their own boss was the main factor that was reported, with freedom and being in control of your work closely following.

There are a few things to keep in mind if you are thinking of starting your own business or buying an existing business with the aim of becoming the next Richard Branson.  Firstly, it is important to carry out due diligence on the new venture.  This can include research on whether there is a market for the idea that you have for a business, are there any legal requirements for operating the business, preparing estimates of income & expenses and cash flow requirements Finally, if you decide to go ahead a business plan will also be required.

If it is an existing business you are looking to buy, a detailed investigation of all aspects of the business will be required.  For this, it would be advisable to speak to a professional who has experience of carrying out this due diligence work as will include an analysis of the historical financial statements and records to determine whether the purchase of the business is viable and that the data provided by the seller can be relied upon.

One thing it is important to look out for in the financial review is the add backs of expenses that were deemed to be personal to the owner as this is a major factor in calculating the value of the business.

If you are thinking of starting or buying a business, talk to the experts at Sothertons Gladstone on 4972 1300 or email Joe at j.smith@sothertonsgld.com.au