Resales are a great opportunity for people to get into a business, without the time spent in starting the business from the ground up. Most see it as an opportunity for quick cash flow.
For some I work with, this is the only option they’ll consider, thus the addition of this section to the newsletter.
Here are my words of caution and advice when exploring resales:
You are generally purchasing a business that has some skeletons in the closet – do you have the skillset and staying power to overcome them? Are you comfortable with surprises?
If the business is operating at a profit, it will generally sell for top dollar. Consider your investment capability, would a start up business yield a higher return, since you’ll generally get in for less up front and therefore less debt service.
Do you have a “particular” business model or parameter for what business you want to be in? For example, if you really want to be in a particular sector say automotive, professional B to B or food – you could be waiting for years for one of those to come up for resale. Years later – you’re in the same place, when, if you’d done a lower investment start up – even in the haircare space that is semi-passive and doesn’t require a full time owner – you could be financially much better off and have built equity in an asset that is now worth more then the resale you’re considering
Time is money. When exploring start up franchises, time is generally on your side. You have time for due diligence, speaking to the franchisor an owners in the franchise and exploring the model thoroughly. When exploring resales, in most cases, you need to devote time and effort and move through your due diligence quickly AND be ready to pull the trigger – good resales go quickly.
Ok – You’ve heeded my words of caution, thank you for allowing me to assist. Here are a few hot resales and the markets they’re located in.