It’s hardly news that Western and South-Western Sydney are poised for enormous growth, but what is interesting is how local businesses are positioning themselves to take advantage of the coming opportunities.
One of our clients – Reliable Food Distributors, based in Prestons – has just taken a giant leap and increased their warehouse space by almost eight times, on the back of increasing demand and the strong forward outlook for their products.
Western Sydney cousins Ben Gullo and Sam Longo began operating Reliable Food Distributors in 2004 with the purchase of a ‘tiny’ smallgoods run, comprising a chest freezer and an old transit van.
Nineteen years down the track and the family business has just moved into a new 3,000 square-metre warehouse. This new ‘home’ features design and technology improvements to drive efficiencies when servicing customers old and new.
You can hear all about their business journey on Episode 4 of my podcast, Let’s Talk Business.
How to capitalise on the coming business opportunities
If you’re a business owner in Western Sydney and you’re wondering what you should be doing to tap into the coming opportunities, it will depend on where you are in your business lifecycle i.e. looking to grow, hold, or exit.
For those looking to grow, it will be important to be at the front of the wave, not left behind. There will be a lot of businesses focusing on Western Sydney over the next 10 years and if you want to compete successfully, you need to start planning for growth and refining your business now.
For those looking to hold or exit, now is your opportunity to be ‘tweaking’ your business to make it more attractive – and more valuable – to you, in terms of returns, and to potential purchasers.
My advice for those looking to grow is to sit down with an independent advisor, someone you trust to give you impartial advice, who understands your specific industry and is also tapped into what's going on in South-Western and Western Sydney.
A good advisor will consider:
- What does the market look like currently? How is it predicted to change? What risks/opportunities could this bring for your business?
- What does your business look like right now? How effective are you in managing your customers/ suppliers/ staff?
- Is your business model and physical assets (premises and P&E), and technology and digital systems able to cope with increased demand, both from a physical sense in terms of delivering the services you deliver, but also from a financial perspective, including working capital and cash flow?
- If you are set up to capture increased demand, what is your target client and market? Do you just want to ‘ride the wave’ or be more focused in attracting new business?
- What does this all mean for business returns, risks, and enhancing business value over time?
The other part of this story is those business owners who are looking to exit in the next five years, and have an opportunity to sell in a very strong market.
If you’re in this situation, what should you be doing to maximise value on exit?
First, seek an independent view about what your business is worth today, and then a prospective view about what the business could be worth in three to five years based on the external market developments in Western Sydney.
Make sure the scope of the valuation includes what the key value drivers are in your business today, and what levers you can pull to enhance the value and increase the probability of a sale.
For example, you may need to:
- refine your customer base so that it’s not overweight in a particular area;
- secure a larger premises to account for the growth potential, before rents rise and supply tightens;
- put in place additional management capability so the business is not completely dependent on you, the owner, to drive the business;
- arrange contracts for services provided that are currently based on verbal agreements, but which have strong repeatability.
Of course, it’s not all good news because we can’t forget the broader economic circumstances we’re facing in the next 12 to 24 months, as interest rates weigh on housing demand and constrain discretionary spend in some areas.
But the big engine that is Western and South-Western Sydney can’t be turned off, because it’s driven by government investment in infrastructure, roads and rail routes, the airport investment, and by new cities and towns, and existing demand for housing outstripping supply.
Interest rates will come and go, the economy will ebb and flow, but those sectors will make that engine very, very strong in the next five to 10 years.
* About the author: James Price has 30 years’ experience in providing strategic, commercial and financial advice to Australian and international business clients, through his advisory, transaction and valuation firm, JPAbusiness. Follow the link to listen to the Let’s Talk Business podcast with James Price, or read the JPAbusiness blog online.