How to buy a profitable business

There are several ways to make money from a business. First, create it yourself, from scratch. Secondly, buy some well-known franchise. Third, buy a reliable profitable business. In this article, we’ll take a closer look at the latter option.

Ideas for a profitable business are not always there. In addition, this often requires time, money and certain skills. A franchise, that is, the right to create a business under 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, scripts for communicating with clients. At the same time, you still have to look for premises, buy equipment, train employees, and develop a client 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 you need to know?

By purchasing a ready-made business, you get control over assets and business processes. The algorithm is something like this: we evaluate the market and assume prospects, select an area, find a ready-made business, check it, register an IP and transfer assets to ourselves. If you acquire an LLC, you must also buy out the shares of the previous founders or create a new legal entity.

By purchasing a ready-made company, you start making a profit right away. On the other hand, you run the risk: the business may have debts, the real state may differ from the one stated in the documents for the worse. Always analyze the 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 look out for

1 Marketing strategy

Are there any sales? Does the customer acquisition system work? Every business sells something. Check traffic sources, advertising budgets, communicate with department managers and find out the motivation of performers.

2 Change of work team

In some cases, the team partially changes after the purchase of the business. In some cases, these are really important specialists.
It is advisable that the seller warn everyone in advance about the sale and tell you the reaction and plans. Get to know 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 business is renting a space, meet the owner and see if the terms of the lease will change. Specify details about debts, prices for utilities. Ask him about the business, the owner, and how long he has been renting the space.

4 Legal risks

Check the extract from the state register of legal entities, find out as much as possible about the owner and legal entity. Try to create a new legal entity when buying. Also talk to the suppliers: did the owner have any problems with them? Are there any debts left?

5 Reputation

Look for business reputation data and check the degree of process automation. Find out what takes time, what tasks are done constantly. In addition, try to make a clause in the contract that after the purchase it will be in touch with you for some time. Describe what he can help with, in what period of time, how he will transfer control.

6 Reasons for selling a business

There are good reasons: burnout of the owner, or, for example, resale. Let’s say he bought a business for 100,000, upgraded it, and sold it for 350,000. It happens that 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 wary if the business has no profit or they have fallen sharply.

Documents for concluding 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 violation of the contract, the date, put signatures.

If you acquire an "LLC", you can join the founders with the exit of the previous owner from it or organize bankruptcy proceedings with the company’s buyout at auction. The second case, however, is more risky: at the auction, competitors can offer a higher price. If you decide to use the first option and become a member, then:

• draw up an application in the form P13001, certify it with a notary;
• receive the decision of the founders to increase the management of the company, the charter of the company, a check for payment of the state fee and an extract from the bank confirming that the amount has been paid in full to the Criminal Code by the new participant;
• prepare a contract of sale, arrange for the presence of a notary at the transaction.

What is the best business to buy?

Over the past few years, the pandemic has been hitting small and medium-sized businesses: restrictions have had a bad effect on the services, entertainment, beauty industry and other niches. At the same time, more businesses based on agriculture, real estate, and construction have appeared.

Unfortunately, hotels, gyms, beauty salons have not yet returned to the economic indicators that 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.

Firstly, these are IT companies, the game industry and profitable sites. If those who are willing to invest a few million can afford the first two options, the site can be bought even for 100,000 🪙. Various applications will also gain popularity. To make money on this, you need to buy a good idea and find a good team. If you are thinking about which ready-made business is better for a beginner to buy, consider this option.

Secondly, it’s all related to the health industry. From research labs to health products. From health care systems to healthy food cafes.