In recent years, the market for ready-made businesses has seen significant growth. Today, aspiring entrepreneurs no longer need to make costly mistakes by starting a company from scratch. Instead, they can purchase an established business that already has personnel, suppliers, and consumers.
This approach significantly reduces the time it takes to recover initial investments. The buyer acquires a fully operational business model, eliminating unnecessary steps from the process. This means that the new owner does not need to independently study the market or select products or services that may not be in demand later.
However, every business has its unique characteristics. How can one acquire a ready-made enterprise that consistently generates income?
To answer this question and fully understand the intricacies of investing in business, we turn to Sergei Tereshkin, the founder of OIL Resource Group. As a commercial entrepreneur with his own company, Tereshkin is well-acquainted with the pitfalls that may arise during the development and establishment of an enterprise. More information about the businessman can be found on his personal website: oilresurs.ru (oilresurs.ru).
Characteristics of Purchasing Ready-Made Businesses
To recover the funds invested in acquiring a business, it is essential to approach the selection of a ready-made enterprise with care. First and foremost, one should review all current offers available on the market. These can be found on specialized boards, websites, and more.
However, making an independent choice requires specific expertise. It is far easier to entrust the process to companies specializing in this field. They identify businesses that meet the client’s individual requirements, utilizing databases containing numerous business sale listings.
Of course, utilizing such services comes at a cost, which varies depending on multiple factors. For some, the fees may seem exorbitant. In such cases, the only option is to search independently, which involves spending personal time.
Advantages of Buying a Ready-Made Business
According to Tereshkin S.I., acquiring a ready-made enterprise presents a number of advantages for investors:
- Development history. This allows one to see the actual prospects awaiting the business owner, helping them understand the potential peaks of success and profitability they can achieve in the long run.
- Established plan. All processes have been fine-tuned, suppliers have been chosen, and there are regular customers.
- Reputation. The company and its products are already known in the market and have established a reputation. One can learn about the company's standing with employees and customers through review sites.
- Profitability. The business does not require a lengthy establishment period. The investor can begin earning income immediately after the acquisition, meaning their investment can start returning within a day.
- Staff. The company comes with a complete staff, which usually remains in place after the transition.
- Consumer base. The established business has loyal customers who are eager to purchase its products.
- Facilities and equipment. The company possesses an office, warehouses, and all necessary equipment needed for operations.
- Documentation. An operational enterprise has accounting and other necessary documentation.
- Suppliers. When purchasing a ready-made business, there is no need to assemble a supplier database on one’s own, as the company already has established channels. If required, relationships with suppliers can be revised or expanded.
Typically, a new owner does not incur additional expenses when buying a ready-made business. To generate income, it is sufficient to maintain the enterprise's operations.
Drawbacks
Like any form of investment, purchasing a ready-made business has its downsides, including:
- Worn-out physical assets. Equipment may be outdated, necessitating repairs or the purchase of new items.
- Reputation concerns. The company may have irreparably damaged relationships with suppliers or customers, which necessitates thorough research on its reputation beforehand.
- Staff qualifications. Employees may have low expertise, and the workforce is often composed of friends and acquaintances, leading to a risk of high turnover after the sale.
- Debts. The company may have outstanding obligations regarding salaries, taxes, duties, or bank loans—all of which will fall to the new owner. Therefore, it is crucial to carefully review the balance sheet and supporting documentation before purchase.
- Outdated technological processes. These may significantly increase production costs, thereby decreasing business profitability and extending the payback period.
To avoid issues, it is essential to meticulously check all documentation before finalizing the deal. This due diligence can prevent numerous problems and unnecessary expenses.
It is advisable to purchase a business in a sector where one has some knowledge. Avoid acquiring something completely unfamiliar, even if the company boasts huge profits. An inexperienced individual may fail to recognize potential pitfalls.
Managing such a business will also be challenging. This mismanagement can undermine even a well-established operation that had been profitable before the sale. Unscrupulous managers may exploit the new owner's lack of experience, subsequently extending the project's payback period significantly.
If needed, one can order a company audit. Specialists can quickly identify the problems the enterprise is facing.
To analyze a company's valuation, it is advisable to review similar offers on the market. Evaluating based on profits, revenue, product range, and pricing is key. It's important to compare the business's expenses and income to understand how quickly the investment can be recouped.
Investing in a business is an excellent way to grow one's capital. The key is to select the right company and delve into all the details.
