There are several ways to make money from a business. First, create it yourself, from scratch. Second, buy some known franchise. Third, buy a reliable profitable business. In this article, we'll take a closer look at the last option.
How to buy a profitable business are not always there. Also, this often requires time, money, and certain skills. A franchise, i.e. the right to create a business with a foreign brand, using ready-made business processes, is also not always profitable.
Sometimes an entrepreneur is given a business plan, information about marketing strategies, roadmaps for communicating with customers. At the same time, you still need to look for facilities, buy equipment, train employees, and develop a customer base. The best option is to buy someone else's business that makes a profit. Here, however, there are also subtleties.
How to buy a ready-made profitable business and what do you need to know?
When you acquire a ready-made business, you gain control over business assets and processes. The algorithm goes something like this: we assess the market and take on prospects, select an area, find a ready-made deal, verify, register an IP and transfer assets to ourselves. If you acquire an LLC, you must also purchase the shares of the previous founders or create a new legal entity.
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When you buy a ready-made company, you start to make a profit right away. On the other hand, you run the risk: the business may have debts, the property may differ from what is declared in the documents for the worse. Always analyze indicators: look for direct and indirect evidence of expenses and income. Check invoices, contracts, receipts, tax returns and more. Also, pay attention to other factors.
what to watch
1. Marketing Strategy
Are there sales? Does the customer acquisition system work? Every business sells something. Check traffic sources, advertising budgets, communicate with department managers and find out artists' motivation.
2. Change of work team
In some cases, the team partially changes after the business is purchased. In some cases, these are really important experts.
It is advisable for the seller to notify everyone in advance about the sale and to share the reaction and plans. Meet the team, find out what they intend to do, ask if they have any ideas on how to improve the situation.
3. Rental price
If the company is renting a space, meet the owner and see if the terms of the lease change. Specify details about debts, utility prices. Ask him about the business, the owner, and how long he's been renting the space.
4. Legal risks
Check the extract from the state registry of legal entities, find out as much as possible about the owner and legal entity. Try creating a new legal entity when purchasing. Also talk to the suppliers: did the owner have any problems with them? Are there debts left?
5. Reputation
Look for business reputation data and check the degree of automation of the process. Find out what takes time, what tasks are constantly being done. Also, try to make a clause in the contract that after the purchase he will contact you for some time. Describe what he can help with, in what time frame, how he will transfer control.
6. Reasons to sell a business
There are good reasons: owner burnout or, for example, resale. Let's say he bought a business for 100,000, upgraded it, and sold it for 350,000. It turns out that the partners disagree and decide to stop having joint business. In this case, it is also easier and more honest to sell the company. Unmet expectations, retirement, moving are safe reasons. You should be careful if the business doesn't make a profit or they have dropped drastically.
Documents to close a deal
The main document at the conclusion of the transaction is the contract. It should contain the object of the transaction, its participants from the sellers and buyers, the value of the company, information about debt obligations. Debt details should be as detailed as possible. In addition, they indicate the amount of the fine in case of breach of contract, the date, the signatures.
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If you acquire an “LLC”, you can become a founder member with the departure of the previous owner or organize a bankruptcy process with the purchase of the company at auction. The second case, however, is riskier: in the auction, competitors can offer a better price. If you decide to use the first option and become a member, then:
- file an application on form P13001, certify it with a notary;
- receive the founders' decision to increase the management of the company, the company's statute, a check for payment of the state fee and a bank statement confirming that the amount was fully paid to the Penal Code by the new participant;
- prepare a contract of sale, arrange for the presence of a notary in the transaction.
What is the best deal to buy?
In recent years, the pandemic has hit small and medium-sized businesses: restrictions have negatively affected services, entertainment, the beauty industry and other niches. At the same time, more businesses based in agriculture, real estate and construction emerged.
Unfortunately, hotels, gyms, beauty salons have not yet returned to the economic indicators they were before the pandemic. This means that at the moment they are likely to bring more losses than profits. However, you can consider business in other areas.
First and foremost are IT companies, the gaming industry and lucrative websites. If the first two options can pay off those willing to invest a few million, the site can be bought for 100,000 reais. Various apps will also gain popularity. To make money from it, you need to buy a good idea and find a good team. If you're wondering which ready-made business is best for a beginner to buy, consider this option.
Second, it's all related to the healthcare industry. From research labs to health products. From healthcare systems to health food cafes.