Have you ever bought a business?

Have you ever bought a business?

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Frimley111R

Original Poster:

15,529 posts

233 months

Wednesday 16th April 2014
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I was at a business meeting yesterday and, to cut a long story short, the topic of growing through acquisition was raised. Although it's not something I am considering it did raise quite a bit of interest among others. One had bought a gardening related business (maintenance of outdoor swimming pools) for £50,000 which had net annual profits of £40,000 and a database of 2000 customers which seemed more than a good deal! Particularly as he also offered related services which he could also sell in. We had a look on the web and there were seemingly some quite good businesses for sale with short ROI timeframes. I appreciate that businesses are complex and top line info never tells much of the story of the business but I wondered if others had gone this way on here?

singlecoil

33,307 posts

245 months

Wednesday 16th April 2014
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I've often thought about it but have lacked the wherewithal to proceed with anything. Now I probably could do something but have severe doubts about the longterm viability of just about any business that would be within my reach. Things are changing so fast.

The example you gave might well be attractive, though.

squeezebm

2,319 posts

204 months

Wednesday 16th April 2014
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Grow/expand your own business

Slurms

1,252 posts

203 months

Wednesday 16th April 2014
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Do your homework is all i'd say.

Before parting with money ensure it's going to actually give you the return they claim.

KFC

3,687 posts

129 months

Wednesday 16th April 2014
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Frimley111R said:
I was at a business meeting yesterday and, to cut a long story short, the topic of growing through acquisition was raised. Although it's not something I am considering it did raise quite a bit of interest among others. One had bought a gardening related business (maintenance of outdoor swimming pools) for £50,000 which had net annual profits of £40,000 and a database of 2000 customers which seemed more than a good deal! Particularly as he also offered related services which he could also sell in. We had a look on the web and there were seemingly some quite good businesses for sale with short ROI timeframes. I appreciate that businesses are complex and top line info never tells much of the story of the business but I wondered if others had gone this way on here?
Something like that is bordering on buying a job rather than buying a 'true' business though. Presumably the owner was doing most of the work?

At £40k there isn't any money available to pay someone else to do it... if the owner doesn't do the work then the business is breaking even at best.

Frimley111R

Original Poster:

15,529 posts

233 months

Wednesday 16th April 2014
quotequote all
Well yes, I accept that. The question wasn't aimed at that particular value, it just happened to come up in conversation.

singlecoil

33,307 posts

245 months

Wednesday 16th April 2014
quotequote all
KFC said:
Frimley111R said:
I was at a business meeting yesterday and, to cut a long story short, the topic of growing through acquisition was raised. Although it's not something I am considering it did raise quite a bit of interest among others. One had bought a gardening related business (maintenance of outdoor swimming pools) for £50,000 which had net annual profits of £40,000 and a database of 2000 customers which seemed more than a good deal! Particularly as he also offered related services which he could also sell in. We had a look on the web and there were seemingly some quite good businesses for sale with short ROI timeframes. I appreciate that businesses are complex and top line info never tells much of the story of the business but I wondered if others had gone this way on here?
Something like that is bordering on buying a job rather than buying a 'true' business though. Presumably the owner was doing most of the work?

At £40k there isn't any money available to pay someone else to do it... if the owner doesn't do the work then the business is breaking even at best.
Buying a job is a perfectly sensible thing for people in certain situations to do.

KFC

3,687 posts

129 months

Wednesday 16th April 2014
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singlecoil said:
Buying a job is a perfectly sensible thing for people in certain situations to do.
I'm not saying people shouldn't do it... just pointing out that its very different from buying what you'd call a 'real' business.

DSLiverpool

14,670 posts

201 months

Wednesday 16th April 2014
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Helping a mate do this now, he is importing some retail items in the summer for September sale, I suggested looking for a small company with premises and infrastructure so he can just drop his product in rather than set up payment facilities, recruit staff etc.

singlecoil

33,307 posts

245 months

Wednesday 16th April 2014
quotequote all
KFC said:
singlecoil said:
Buying a job is a perfectly sensible thing for people in certain situations to do.
I'm not saying people shouldn't do it... just pointing out that its very different from buying what you'd call a 'real' business.
I disagree, the business described is very much a business, in every respect. I would venture to suggest that buying the sort of business that can run itself and produce profit without the day to day involvement of the new owner is pretty much outside what would normally be discussed on this forum, and would more properly belong in the Finance section.

Chrisgr31

13,440 posts

254 months

Thursday 17th April 2014
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Surely the ultimate question is why is the business for sale if it is such a good prospect to buy? If you had a great business doing well and you foresaw it was always going to do well why would you sell it?

There are many reasons why one might sell but you need to ensure they are the real reasons and that the figures stack up.

Frimley111R

Original Poster:

15,529 posts

233 months

Thursday 17th April 2014
quotequote all
Chrisgr31 said:
Surely the ultimate question is why is the business for sale if it is such a good prospect to buy? If you had a great business doing well and you foresaw it was always going to do well why would you sell it?
1. Retirement
2. To do something else
3. To realise the value in case the business fails in later years
4. To regain lost time (family, leisure, friends)
5. Because owners become just managers of people and process