From Property To Profit: Why Buying A Business Is A Smarter Investment

While property and shares have traditionally been seen as the go-to investment options for Kiwis, some experts argue that in 2024, buying a business is potentially less risky and could offer better returns and greater financial security—but it is important to choose carefully.

Steven Matthews, National Business Development Manager for largest business sales firm, Link Business Brokers International Group, says there is evidence that several factors, including static or falling property prices, low rental yields, and poor cashflow, are driving the shift in thinking away from residential property investment.

“A factor reducing the risk in buying a business is that most will have proved their resilience by surviving the pandemic and the economic challenges of the past few years.

“If a business has managed to stay afloat during such challenging times, it has demonstrated its viability. These businesses have established systems, strong customer relationships, and valuable intellectual property that give them a competitive edge."

He says that in 2024, businesses—despite the economic downturn—now show that they can offer yields of 25-35 per cent, significantly higher than expected from property investment rentals or the stock market.

“One of the key advantages of owning a business is the potential for regular income. This income can be weekly or monthly, providing the owner with a reliable cash flow that can be reinvested or used to grow the business further.” 

Best businesses to buy?

Matthews suggests focusing on sectors that provide essential goods and services. These are the types of businesses that people and other companies need, regardless of economic conditions.

"Everyday necessities like food, business-to-business services such as cleaning or air-conditioning, and industries that support other businesses, like consultancy, tend to be more stable and less affected by economic fluctuations," he says.

Another important consideration is the business’s track record.

“Look for businesses that have operated for at least five years and have successfully navigated recent economic upheavals. They have shown they can adapt and continue to be profitable despite tough conditions. This resilience is a strong indicator of future success," he says.

The Government and private sector’s investment in infrastructure projects will generate new business opportunities.

"Where new infrastructure developments occur, they create new markets. Businesses that can serve the needs of these projects, whether by providing goods and services to workers or catering to new residents, are likely to see strong demand," he notes.

For those thinking about leaping into business ownership, Matthews offers three key pieces of advice:

1. Supply necessities

Focus on businesses that provide essential goods and services, which tend to have steady demand regardless of the economic climate.

2. Choose a resilient business

Look for businesses with a proven track record, especially those that have survived recent challenges like the pandemic.

3. Follow the money

Invest in areas where new infrastructure or development projects are taking place, as these create new opportunities and markets to serve.

Matthews says that while property and shares have their place in an investment portfolio, the potential for higher returns, regular income, and proven resilience makes buying a business an attractive option for those looking to build wealth in 2024.

ABOUT

Link Group International, founded more than 27 years ago, specialises in connecting business owners with buyers globally. With 23 offices across New Zealand, Australia, and the USA, its extensive network includes over 200 specialist Business Brokers. The company maintains a robust database of over 250,000 active buyers, ensuring it meets diverse client needs effectively and efficiently.

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