Make a fortune buying under performing businesses.
Make a fortune buying under performing businesses.
My definition of a business that is under performing is a business that is not reaching its full potential. It has been a long practice of Asset Management companies to seek out businesses in a specific industry that are under performing, fix them, hold them for several years and then sell them for a profit. Now Asset Management companies typically have access to millions of dollars and seek large companies, however you don’t need to have millions, to duplicate the same process. You can seek smaller companies which are readily available and require a lot less money to buy, thus for $200K you could own 3-4 small businesses and keep growing from there. The key to finding an under performing business is to know what to look for, ask the right questions, do some investigative work and come up with a business plan and strategy on how to fix the problems that maybe facing that particular business. Here are some of the things to look for:
1. Owners Participation: As I have stated in the past, owner’s participation is key to any business success and most absentee owners leave too much responsibility to key employees who have nothing at stake to make a business more successful. These businesses typically have higher than usual costs, lack in customer service, and have ineffective or non existent marketing campaign. These are all easily fixed with an active owner and if you must have a manager running your business, give your manager an incentive to be more diligent. Profit sharing, bonus program or compensation based on performance are all excellent ways of motivating your staff. There are plenty of businesses where the owner is actively participating in the daily operations of the business, but lack the “business experience” of running the business. Most successful businesses have an owner who is the CEO and the CFO of their company and are actually working ON the business, not IN the business. Here are some examples of this: A plumber who does his own work, and thus does not have time to actively network the business, restaurant owner who works in the kitchen, instead of managing the restaurant. When the owner is too busy working IN the business, that business will typically have the same problems as if it was being run absentee.
2. Distressed Owner: A Distressed owner is someone who is selling because they are retiring, getting a divorce, relocating or illness. Most of the time their companies and businesses are doing very well, but they are selling below market value for a fast sale. Keep in mind that you still must do a thorough due diligence, to verify the reason for the sale.
As you do your due diligence, the important things to look for, besides all the things I have mentioned above, are sales trends over a period of 3 years if possible. If there is a trend down ward year after year, ask why, it a good sign of mismanagement, but could be a sign of something worse, like a product getting obsolete, contracts being lost, etc. Stay away from businesses that sell trendy products, since trends get hot and cold. Interview the owner and find out why sales have been going down. Talk to employees if possible, landlords, suppliers, etc. The important thing for you to identify is what can be done to improve the company and the business and then ask yourself if it is something you can accomplish. If the answer is yes, then you got yourself a “Bargain”, if the answer is no, move on. Here is one more thing to consider. Some of the best bargains are in Franchise Resale’s and they might be the easiest to do your due diligence. Once of the best tools available to anyone looking to buy a Franchise is the ability to speak to existing Franchisees, Area Developers, and Regional Managers. These people could be a great source of information for you and may give you an outline of what needs to be done in order to make a business work. This is only available in the Franchise Industry, so if you are a new business buyer, or even a seasoned one, look at Franchises first.
Make a fortune buying under performing businesses - To learn more about this author, visit David Dolitsky's Website.
Like this article? Share it with your friends
The fundamental principle of investing is to buy low and sell high. Every investor seeks to achieve this principle, regardless of what they invest in. Whether you trade stocks, bonds, gold or real estate, everyone seeks to find the diamond in the ruff or “The Bargain”. If you’ve ever read my blogs, or spoken to me on the phone, you know that I look at business ownership as an investment, and just like all the other investments, there are “Bargains” here as well and you could make a fortune buying under performing businesses as long as you know what to look for.
My definition of a business that is under performing is a business that is not reaching its full potential. It has been a long practice of Asset Management companies to seek out businesses in a specific industry that are under performing, fix them, hold them for several years and then sell them for a profit. Now Asset Management companies typically have access to millions of dollars and seek large companies, however you don’t need to have millions, to duplicate the same process. You can seek smaller companies which are readily available and require a lot less money to buy, thus for $200K you could own 3-4 small businesses and keep growing from there. The key to finding an under performing business is to know what to look for, ask the right questions, do some investigative work and come up with a business plan and strategy on how to fix the problems that maybe facing that particular business. Here are some of the things to look for:
1. Owners Participation: As I have stated in the past, owner’s participation is key to any business success and most absentee owners leave too much responsibility to key employees who have nothing at stake to make a business more successful. These businesses typically have higher than usual costs, lack in customer service, and have ineffective or non existent marketing campaign. These are all easily fixed with an active owner and if you must have a manager running your business, give your manager an incentive to be more diligent. Profit sharing, bonus program or compensation based on performance are all excellent ways of motivating your staff. There are plenty of businesses where the owner is actively participating in the daily operations of the business, but lack the “business experience” of running the business. Most successful businesses have an owner who is the CEO and the CFO of their company and are actually working ON the business, not IN the business. Here are some examples of this: A plumber who does his own work, and thus does not have time to actively network the business, restaurant owner who works in the kitchen, instead of managing the restaurant. When the owner is too busy working IN the business, that business will typically have the same problems as if it was being run absentee.
2. Distressed Owner: A Distressed owner is someone who is selling because they are retiring, getting a divorce, relocating or illness. Most of the time their companies and businesses are doing very well, but they are selling below market value for a fast sale. Keep in mind that you still must do a thorough due diligence, to verify the reason for the sale.
As you do your due diligence, the important things to look for, besides all the things I have mentioned above, are sales trends over a period of 3 years if possible. If there is a trend down ward year after year, ask why, it a good sign of mismanagement, but could be a sign of something worse, like a product getting obsolete, contracts being lost, etc. Stay away from businesses that sell trendy products, since trends get hot and cold. Interview the owner and find out why sales have been going down. Talk to employees if possible, landlords, suppliers, etc. The important thing for you to identify is what can be done to improve the company and the business and then ask yourself if it is something you can accomplish. If the answer is yes, then you got yourself a “Bargain”, if the answer is no, move on. Here is one more thing to consider. Some of the best bargains are in Franchise Resale’s and they might be the easiest to do your due diligence. Once of the best tools available to anyone looking to buy a Franchise is the ability to speak to existing Franchisees, Area Developers, and Regional Managers. These people could be a great source of information for you and may give you an outline of what needs to be done in order to make a business work. This is only available in the Franchise Industry, so if you are a new business buyer, or even a seasoned one, look at Franchises first.
Make a fortune buying under performing businesses - To learn more about this author, visit David Dolitsky's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
Staging DivaDebra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website |
|||
Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
|||
Casey GollanCasey Gollan, Business Coaching & Mentoring Programs. Add $1 Million to $10 Million in the next 1 to 3 years. Since 1996 Casey has to added hundreds of millions of dollars to businesses. Watch a free video see client results Business Coaching website. - Visit Casey Gollan's Website |
|||
George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
|||
Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
|||
David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to David's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
 |
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Mirror Marketing Business Coaching Make Money Online How To Get Media Attention Recession Proof |
|
 | ||
 |
Fortune Hunters
CBC Entrepreneur TV | |
 |
The Top 10 GTD Times Posts
Best Posts for Productivity | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
| ||||||||||
|
| ||||||||||
|
|
||||||||||