Winstanley Kerridge new business series

Over the coming weeks, Barry will be posting a short series of blogs that may be useful for people considering buying an existing business or setting up their own business.


Barry Mosley Winstanley Kerridge Business Strategist

Over the coming weeks, Barry will be posting a short series of blogs that may be useful for people considering buying an existing business or setting up their own business.

First up - some cold hard stats

Did you know – one in 10 small businesses in New Zealand fail in their first year, while 70 per cent of businesses don’t survive the first five years?

A Waikato University study showed only 49 per cent of businesses hiring 1-5 staff, and 55 per cent of businesses with 6-19 staff were still around after five years.

The main reasons for these failures were found to be poor management, inadequate record keeping, undercapitalisation, inexperience, poor planning, bad decisions around stock, poor utilisation of time and neglect of marketing.

Are you considering going into business yourself or buying an existing business?

First of all - good on you! It takes guts to take the leap into self-employment, and it’s going to take a lot of hard work and the best tools and resources you can get your hands on to ensure your new venture is a success story.

 A well managed businesses will have the ability to weather economic cycles and industry downturns.


Secondly - run your eye over the following questions and be honest with yourself - can you answer them positively?

1.  Do I have the experience/capability in the field that I am looking to invest in? Do I have the support of my immediate family?

2.  Do I have sufficient capital to purchase/start the business and provide a working capital base without having too high a gearing (borrowing) level.

3.  Are the partners I’m working with right for the business? Do they have the tools to provide me with the information I want?

A good method is the traffic light system.  If you got green lights on all those points, congratulations, it looks like you’re off to a good start.  Orange lights - you may want to re-think your options, dig a little deeper, or look elsewhere for something more suitable.  Red lights - We all know what that means - Stop! Danger is imminent!

If you’re considering going into business, make sure you seek advice from professionals that can assist and guide you.

In our next post we’ll explore the importance of getting into a venture you have knowledge of and experience in.