BUSINESS

RISK

Economic Risk – Risk that is associated with

fluctuations in the economic cycle. One can

graph the peaks and troughs of business

activity, keeping an eye on trends in business

and consumer confidence, interest rates and

growth patterns.

RISKS ACCORDING TO BCI

RISKS ACCORDING TO BCI

Industry Risk – Risk relating to a particular

industry. This can be due to technological change

or anything specific to that industry. It focuses on

external not internal factors of the business. Such

industries impacted recently include the music

industry, publishing, video stores, photographic

finishing and the like and even wholesaling.

Personal Risk – Risk associated with the investor

looking to invest in a business in which he or she will

play an operational role. It can relate to age, health,

stage in life & personality of the investor. It also relates

to the needs the business will place on the operator

and the ability of the operator to meet those needs.

RISKS ACCORDING TO BCI

Legislative Risk – Risk associated with

investing in a business that is prone to change

due to government legislation pertaining to that

industry. Such businesses have included

newsagencies, training organisations, child

care institutions, liquor shops and hotels.

RISKS ACCORDING TO BCI

Every one of these risks can be measured and

accounted for by paying attention to the cycles that all

businesses move through. We may not be able to

predict the future but we sure can have a better guess

if we are informed and watch the trends.

 

RISKS AND CYCLES

The Economic Cycle. Chart and watch the movements

in Interest Rates, Consumer Confidence, Stock Market

Indices, Business Investment plans and you will soon

see where we are in the cycle. You don’t buy at the top

of the cycle and don’t sell at the bottom. Sell just before

the top and buy just after the bottom. Or close to it.

RISKS AND CYCLES

The Industry Cycle. This closely follows technology and

the changing tastes of people. Look at what has faded

and disappeared into history. Why did it happen? What

can you learn from that? Is your industry threatened by

any change on the horizon? Are people’s habits

changing? Does change appear to be long term?

RISKS AND CYCLES

Your Personal Cycle. You will or have reached your

peak. Your enthusiasm of early years gives way to

experience & wisdom. You want to be selling when

there is still an ability to hand over the business and

transition the buyer on the road to prosperity. You want

to be in sell mode before your stamina and health wane

RISKS AND CYCLES

The Legislative Cycle. Governments legislate according

to perceived inequalities or to gain advantage over their

opponents. At times certain things like education or

child care take prominence & you can see legislative

change coming. The chatter starts before the laws

change. Listen to the chatter & act ahead of the game

RISKS AND CYCLES

BCI Business BrokersTony Arena (Managing Director)

3/1 Alexander Street, Crows Nest, NSW, 2065Phone: +61 2 9439 3399Mobile: +61 411888148

Email: tarena@bc.com.auwww.bc.com.au

For Advice On Business Valuation

For A Free Consultation On The Value Of Your Business

Visit our website:

For help in maximising your business value take a look at our product here

www.bc.com.au/maximise.html

Maximise Your Business Value