Now is an opportune time for financially healthy businesses to takeover small enterprises feeling the pinch as a result of higher interest rates and inflation according to GiffardSim Accountants principal Rob Giffard.

“Small businesses owners are now beginning to realise that the economy is getting much harder, business seems more challenging than it has been over the last few years and now they may be looking at getting out,” Mr Giffard said. 

Reports of small business failures are surfacing Australia wide and Mr Giffard believes this trend will only continue. “Interest rates have gone up more than a notch and the banks are going through a phase where they are making greater than expected provision for bad debts, as well as putting more pressure on businesses with poor financial management systems in place.” 

This does, however, present an opportunity for cashed-up businesses to takeover others at a good price and gain underlying benefits such as new production equipment or a solid customer base, allowing them to create synergy and improved profits. 

“I liken this situation to economic Darwinism – those businesses that have not adapted to new conditions, changed their ways of thinking or developed sustainable and profitable business practices move down the food chain and are at risk of becoming the victim,” Mr Giffard said. 

It may sound dire for the defeated business, but Mr Giffard insisted it can be a win-win situation for both those trying to exit the market and the companies that take them over. “It may be an excellent opportunity for some business owners to exit a depressed market and realise as much profit as possible,” he said. 

Businesses with good financial controls in place or those who anticipated a down turn in the market and planned accordingly may now have surplus capital to reallocate and grow their existing business. It may seem like common sense to do this, but Mr Giffard said many small and medium business owners think reactively about day-to-day activities and fail to think strategically about how to grow and achieve overall targets. “In other words, sharpen your pencils and recharge your calculators now,” Mr Giffard advised. 

“If you are in a position where you are excited about the future and growing your business is a possibility, now is the time to think about it, because there are plenty of businesses out there for the picking,” he said.

If you are hoping to exit the market or if you are looking to takeover an existing business, we recommend you seek professional advice regarding the best strategy for your situation. Talk to one of our friendly and knowledgeable specialists at GiffardSim Accountants to find out how to implement the best strategy for your maximum benefit. GiffardSim Accountants can be contacted on 02 4421 4355.