Building a business independently is a challenging task that requires significant financial, time, and other resources. Sometimes, it is much simpler, faster, and more profitable to acquire an already functioning enterprise, which will start generating income and returning investments from day one, rather than developing a business from scratch.
However, purchasing an operational business also comes with its own set of challenges. It is crucial to choose the right company. How can this be achieved?
To address this question, Sergey Tereshkin, the founder of OILResurs, has stepped in. The businessman owns a well-established company and is familiar with the intricacies of development in this sector. More information about the entrepreneur can be found on his website: sergeytereshkin.ru (сергейтерешкин.ру).
Features of Acquiring an Established Business
The cost of an established business can vary significantly. For example, it is possible to purchase a business for as little as $10,000, but it is essential to understand that additional financial investments will be required. Without these, expecting quick profits would be unrealistic.
Projects valued at over $50,000 or even $100,000 can generate income immediately after purchase. Such enterprises possess everything necessary to achieve profitability: equipment, premises, inventory, personnel, contracts with suppliers and consumers.
When selecting a business for purchase, it's important to consider the payback period. According to international standards, the optimal payback period is 18 months. However, in the Russian context, most sellers factor in not only their expenses from the entire previous period but also the amount needed to acquire certain essentials like property, vehicles, etc. This results in a significant increase in price. Concurrently, demand declines.
In the Russian market, a payback period of 24 months is considered normal. This duration is acceptable to both parties—buyers and sellers.
Factors to Consider When Investing
When purchasing an established business, it is also important to take into account several factors:
- The price. The market offers a substantial number of proposals for the sale of projects. The same sum can buy various enterprises. In some cases, businesses of similar type and scale can be priced at $100,000 or $500,000. The only difference would be the amount of profit the enterprise generates each month.
- Knowledge. Preference should be given to companies whose operations are fully understandable. One should avoid taking on an overwhelming burden that may become difficult to manage later or require hiring additional personnel. This primarily applies to specialized areas that might only be comprehensible to a professional. In some cases, after a change of ownership, a business may collapse or its profitability may significantly decline, particularly in projects where operations are heavily reliant on personal connections.
- Assets. Even if the business is fully equipped, one cannot dismiss the possibility that the equipment is outdated and in need of complete replacement. Inventory may be expired or close to its expiration date, rendering such a material base nearly worthless.
It is important to independently verify all received information and delve into details that may initially seem insignificant.
Popular Business Sectors
Tereshkin S.I. conducted market monitoring and identified sectors that are currently in the highest demand among investors. These include:
- Beauty salons. This can range from small barbershops to luxury establishments. Wealthy men often purchase salons for their wives or other women.
- Pharmacies. The pharmaceutical business can provide its owners with a steady income, as people will inevitably fall ill, ensuring a constant demand for medical products.
- Medical centers. The same factors that apply to pharmacy purchases also hold here.
- Fitness clubs. The healthy lifestyle trend has gained significant popularity in recent years. Many modern individuals regularly attend fitness clubs to maintain their physical condition.
- Restaurants. Food service establishments can also provide stable profits for investors; however, this sector requires considerable knowledge.
The mentioned sectors are reasonably priced and do not require specialized knowledge, with the exception of the restaurant business.
Frequently Sold Businesses
However, demand does not always create supply. Among the plethora of sale advertisements, many do not represent the most sought-after sectors. The following businesses are sold most frequently:
- Travel agencies;
- Dry cleaners;
- Fast food outlets;
- Currency exchange offices;
- Mobile service salons.
In most cases, businesses are sold due to increased competition or declining demand, as seen with mobile service salons or exchange offices.
Conversely, fast food outlets, travel agencies, and dry cleaners maintain stable popularity.
Currently, the sale of established businesses is a growing investment avenue. Many entrepreneurs understand that it will take years to establish a new project. It is easier to purchase an existing venture and start earning profits tomorrow rather than gamble on an unknown outcome. There is no guarantee that a new company will secure its position in the market.
The key is to select a sector that will genuinely ensure stable profits and avoid falling victim to fraud. Thus, it is vital to analyze all presented data independently.
