Buying an Underperforming Small Business in a Downturn Economy

38 views 9:37 am 0 Comments April 6, 2022

Does it make sense to buy a small business that needs fixing up and then selling it or keeping it to help generate the income and life style you are looking for? It is an interesting concept isn’t it. Much like buying houses and flipping them, or fixing them up and selling them – or even becoming a landlord with rental property – commercial or residential; do you see the similarities?

Okay so, not long ago, an acquaintance weed shop uk mentioned that one of the “Key factors” in choosing what type of business he was interested in buying was finding an “underperforming business” and one which had an incredible future untapped potential, he considered this to be his “ideal scenario” and yes, that is an interesting way to determine which existing small business to purchase isn’t it. Now then, let’s discuss this topic shall we?

First, if this makes sense to you also, you then need to ask yourself; where can we find such a business, or how can you find such a business to buy? Well, you are in luck because right now (end of 2010), basically, most all small businesses in the US right now are in this category – and I’ll be blunt, but probably every industry – the way I observe things. What else should you consider?

How about that the business is viable, just like a rental property that needs to be fixed up is bringing in at least a little bit more than the cost to service the debt, and make the basic repairs. Indeed, my acquaintance adds to his criteria in Buying an Underperforming Small Business that it; “Needs to at least be marginally profitable at the moment under poor management.”

Well then, this secondary add on to the criteria takes us down to about 25-30% of the small businesses in the country currently then. And that number used to be even lower, but so many underperformers have been weeded out now, that is to say they’ve gone out of business already and are not for sale – better you than them you think. Indeed, perhaps, and so, I surely hope you will find the right existing business to buy prior to taking the plunge. Please think on this.

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