The Hidden Gaps in Business Buyers' Knowledge

Myths Are Not Always Correct

Never assume that a person buying a business understands the full picture of what it takes to successfully operate one. Even the most experienced corporate professionals can be caught off guard by the realities of running a small business.

I once worked with a client purchasing a retail business who confidently declined our offer to set up a Business Enhancement System. “I’ve been a Managing Director of a Public Company,” he said. “I know how to run a business.”

Two months later, he called in a panic — his bank balance was falling, despite strong sales. Upon review, I discovered he was setting retail prices by adding the gross profit percentage to the supplier’s cost — not the markup percentage. This simple misunderstanding meant he was undercharging for every product.

When I explained the correct pricing method, he admitted that in his previous corporate role, “the accountants handled all that.” He was a strong marketer, but lacked the financial systems knowledge needed for small business survival. From that day forward, we implemented monthly financials, meetings, and performance monitoring — and his business began to thrive.

That experience shattered the myth that any experienced executive can seamlessly run a small business.

Operating a Small Business Is Challenging

Small business ownership demands a blend of financial control, commercial awareness, and time management that many new owners underestimate. In larger organisations, these responsibilities are shared across departments. In small businesses, the owner wears every hat — often without realising the depth of what’s required.

This is exactly where accountants, bookkeepers, and advisors can make a transformational difference.

In February 2024, MYOB CEO Paul Robson wrote in the Financial Review that a survey of new business owners revealed “widespread deficiencies” within just six months of operation — issues that could have been avoided with professional advisory support at the acquisition stage:

✅ Assuming credit terms must be offered to every customer

✅ Lacking a systematic approach to debt management

✅ Failing to follow up overdue accounts

✅ Ignoring “Debtor Days Outstanding” as a critical cashflow KPI

Key Areas Where Clients Need Guidance

When a client approaches you about buying a business, your advisory checklist should go far beyond tax and due diligence. Ask:

Does your client have experience in this industry?

Have they reviewed lease conditions — especially make-good clauses?

Do they plan to retain existing team members, or replace them strategically?

Has a competitor and SWOT analysis been completed?

Does their pricing model generate sufficient profit margin?

Has a business plan, budget, and cashflow forecast been prepared?

Has the impact on personal and family life been realistically considered?

Positioning Your Firm as the Trusted Partner

Your proposal should clearly outline how your firm will help clients survive and thrive in business ownership — not just complete the tax work.

Within the ESS BIZTOOLS Buying a Business Package, you’ll find a comprehensive framework covering:

Thinking of Buying a Business: Personal motivation, market analysis, location checks, and operational feasibility.

Purchasing a Business Checklist: Financial records review (5 years), tax returns, debtors analysis, restraint of trade agreements, and stock evaluation using the Star/Cash Cow/Problem/Disaster model.

Business Plan Support: Budgets, cashflow forecasts, and projected balance sheets — the financial interpretation of the plan.

The 52-Week Business Enhancement System: Daily, weekly, and monthly reporting tools to track performance, identify risks, and maintain profitability.

These systems enable your firm to move beyond compliance — delivering Financial, Commercial, and Management Accounting Advisory Services that genuinely impact client outcomes.

Your Call to Action

Remind clients that tax returns don’t help them run a business — but structured advisory support does.

Position your firm as the advisor who ensures that every new business owner starts with the right systems, strategy, and financial visibility to succeed.

EXPLORE BUYING A BUSINESS PACKAGE HERE

Visit our website – www.essbiztools.com.au – to discover the detailed overview of the services provided by ESS BIZTOOLS. You are also welcome to contact us on 0418 190 181 or email .

Free Webinar by ESS BIZTOOLS

Buying a Business: Guiding Clients to Buy Smarter

📅 Wednesday 22 October 2025 | 11am AEST

💻 REGISTER HERE

ESS BIZTOOLS Podcast

In this episode of Accountants Minute Podcast, Peter Towers busts the myth that R&D is “only for engineers” and shows how accountants and bookkeepers can lead as the internal-audit partner—keeping evidence tight, forms right, and AusIndustry-ready. Learn how to spot eligible clients, ensuring at least $20,000 was spent on approved R&D work in the financial year being claimed, and turn refundable offsets for sub-$20m companies into real cash flow—opening pathways to ESIC, crowdfunding, and ongoing Virtual CFO work.

CLICK HERE TO LISTEN TO OUR PODCAST

Listen to more Accountants Minute Podcast episodes here

Want to know more?

Visit www.essbiztools.com.au.

If you would like to have a discussion about how this concept of virtual CFO services can be supplied by Australian accounting firms please ring our Managing Director, Peter Towers, on 0418 190 181 and we will arrange a complimentary 45-minute Zoom meeting to discuss your firm’s position and to give you our advice.

We believe that this is the blueprint for the delivery of an enhanced range of services by Australian Accounting and Bookkeeping firms to assist SME businesses to add value to their businesses and to assist accountants and bookkeepers not only to attract but to retain outstanding talent who want to be involved in the delivery of “real accounting services”.

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