Buying a business
Buying a Business in Australia
Many South Africans and Zimbabweans see buying or starting a small business as a means to get into Australia. And that is a fair way to go about things.
Many prospective migrants have assumed ‘calculated risks’ buying Australian businesses virtually ‘over the telephone’ in the hope that they will secure a healthy and predictable future in Australia.
Whilst it is hard to believe that some people would risk their life savings by purchasing a business this way there are special circumstances that drive some to such extraordinary steps. We strongly recommend against hasty decisions which one may regret later-on.
There seems to be a perception amongst some South African businessmen and –women that there exists a real option to start a new business in Australia and thus find residence that way. Whilst, technically speaking, this is true, it is a very, very tough thing to do and only very few migrants succeed in doing that. We know one such a person who does work for the United Nations out of Australia.
South African business people, as a rule, over estimate their ability to successfully manage a business in Australia. Apart from different legal precedents, compliance requirements, customer needs and labour laws the difference in culture between the two countries is more pronounced than what is expected, and so many managers find it hard to accommodate a new style of communication, terminology used and general demeanor within the commercial context.
Business sales in Australia
On our Links page you will find a number of links to business brokers in Australia. From time-to-time we are also asked to list businesses here. Although we have no objections in doing so we wish to point out that we do not facilitate business sales. We do not answer questions nor give advice or documentation about the businesses listed here from time-to-time. We will direct you to the seller and you may choose to make contact with them.
ANZ Bank update - 6 July 2010
Staying put
- Today the RBA kept the cash rate unchanged at 4.5%, as universally expected.
- The accompanying Statement maintained the neutral tone from last month.
- But the subtleties suggest that a further deterioration in the global environment has seen the RBA become slightly more circumspect about the risks to the Australian outlook.
- The RBA also appears willing to look through any rise in inflation above its target band in the short-term.
- While we still see a greater risk that rates will go up than down, the timing of the next move continues to drift further away.
The RBA becomes a little more circumspect
The RBA today kept its cash rate unchanged at 4.5%. While the Bank is maintaining a neutral stance, the risks to its outlook appear to have tilted a little further to the downside.
The RBA is now clearly more concerned about global economic prospects. The Bank is ‘uncertain’ over the outlook for the European economy and highlights that parts of the US recovery are ‘slow’. The Bank notes, for the first time, that offshore funding markets are tightening, but highlights that this is not on the scale seen in late 2008. The RBA also highlights that we are seeing the first signs that growth in China is slowing, but sees this as a slowdown to a sustainable pace (remember last month the RBA noted that some slowing in Asia would be desirable).
Despite this global backdrop, the RBA’s outlook for the Australian economy remains robust. In an unusually detailed Statement, the Bank has maintained its view that Australian economic growth will be around trend over the next year. Importantly, the RBA does not appear to be seeing any fresh tightening of financial conditions locally, but does note instead that credit conditions for some sectors remain difficult. The terms of trade is still expected to approach its previous peak.
The RBA maintains its view, as per last month, that underlying inflation is still likely to be in the upper half of the target zone of the next year. And for the first time in a while, the Bank has highlighted a (small) pick up in wages growth. Having said that though, the Bank is preparing us for some high inflation reads, noting that higher utility prices and tobacco taxes will push headline CPI a little above 3% in the near-term (our forecast is that this will occur in Q3). To us, this is a strong signal that the Bank is now prepared to look through such a breach of its target band, given the increasingly uncertain global backdrop.
The Bank also now sees the current setting of monetary policy as “appropriate”, in contrast to last month’s qualifier that monetary policy was “appropriate for the near term”. This is another subtle way of preparing markets for a prolonged period of steady policy rates.
Overall then, we see a central bank that is still happy with how the local economy is evolving, but that has become more cognisant of the growing downside risks posed from an uncertain global backdrop. In this environment, a temporary breach of its 3% inflation target is less of a concern. We continue to expect the Bank will stay on hold until at least Q4, and admit that the risks are for a more extended period on the sidelines if the global environment deteriorates further.
ANZ Economics and Markets Research