Buy or start a business, EDA -

Opportunity Hamilton

Deciding whether to buy an existing business or start your own from scratch is always tricky. The bottom line is that if you buy an existing business, there should be existing customers from day one, so you get instant cash flow. If you start from scratch, then you need to generate new customers – steal them from other businesses or generate new demand. Both are equally hard.

The question is, how much are you willing to pay for instant cash flow, as (usually) it is always more expensive to buy a business than start, because of the ‘goodwill’ that sellers of businesses want.

‘Goodwill’ is an amount over and above the net assets and it is paid for businesses with great ongoing revenues. For franchise operations you pay franchise fees (which are essentially goodwill) for an established business model that should be easy for you to step into.

Rule of thumb – start your own business if:

You can set up the business for less than the asking price of the business in question, and you have enough working capital to last without any customers.
You have a plan to build a customer base (a better proposition than the competition, or a new market demand).
You have expertise in the industry.
You can access the right location.
If this does not line up, then buying a business may be a better alternative.
Regardless of what you do, seek as much advice as possible before you start, or buy.

Read more here.

Hamilton will host the New Zealand round of the prestigious V8 Supercar Championship in the city for the fifth year in 2012. The inaugural race in April 2008 attracted 172,000 attendees plus 5,000 people associated with the running of the event. The event generated $28.3 million of new money into the local economy in the first year and is estimated to generate $156 million over the seven years that the event will run. Over 100,000 people annually visit New Zealand National Agriculture Fieldays held at Mystery Creek (10 minutes south of Hamilton), which is the largest agricultural event held in the Southern Hemisphere. Each year generates around $290 million sales. As the centre of the thoroughbred industry, Hamilton has an excellent racing venue at Te Rapa. A national trotting track is 15 minutes drive from Hamilton in Cambridge. Raglan is 40 minutes by road from Hamilton and home to one of the world’s longest left-hand surf breaks. Hamilton Zoo is home to over 600 native New Zealand and exotic animals, set in 25 ha of tranquil surroundings. Hamilton Gardens are a free, 58-hectare walk-able wonderland attracting more than 600,000 visitors a year. The natural resources surrounding Hamilton - including its forests, lakes, rivers, and mountains - provide opportunities for tramping, bush-walking, and other types of outdoor recreation. The borough of Hamilton was established on 27 October 1877 and Hamilton became a city on 13 December 1945. Hamilton’s Maori name is Kirikiriroa meaning long stretch of gravel. New Zealand’s longest river, the Waikato, flows for 16km through the city. Mild climate and moderate year round rainfall keep the city and surrounding area very green. Mean temperatures - 18C in January (summer) and 9C in July (winter). Hamilton has135 parks and gardens and 58 sports areas and more than 1,000 hectares of open space. Hamilton has 3 public swimming pools and over 55 kms of walkways in parks and reserves.