Buying a cheap business is always a great alternative to starting one, especially when given the statistic that more than 50% of small businesses fail within the first four years. Now that we’re all on the same page about buying a cheap business, let’s consider the benefits. A cheap business has been underperforming for an extended period of time due to a number of factors like ineffective management skills by the ownership, limited marketing, or slowing down incoming business for retirement. In other words a discount business is an opportunity - for growth, for change, for, well, turning it around!
The business for sale marketplace has been steadily increasing for years. In addition to that fact, we are now seeing a good flow of baby boomers retiring and putting their business on the market. This means there are quite a few opportunities to buy a cheap businesses in every industry imaginable. So what are the advantages of choosing a cheap business? Let me explain!
For starters, when choosing to buy a cheap business you should consider that they will already have a customer base and some form of existing systems to begin from. These systems can be used as is, upgraded, or replaced with more efficient technology. Both customers and processes, take a long time to implement in a startup setting, so having a baseline to run from will save an owner time, and money.
Another item to consider is that despite the owner stepping back, or the business having no marketing plan in place, whatever the reason behind the business’s discount status, the business is alive and managing to operate. This business has something good going for it from a need for its services or products in the marketplace to high level employees keeping customers coming back. So from a new ownership perspective, with more attention to the business plan and better management practices the business should be able to flourish.
A discount business will also have cash flow. Even if the cash flow is negative due to business expenditures or high debt, this is a positive quality. It alludes to the fact that with some changes to the business’s operations it can produce consistent or even rising cash flow for a new owner.
It may sound confusing, but it is not unheard of for a cheap business to be turning away customers. The business’s scale may be unable to handle a high level of requests and the current owner is not equipped to grow the business. Or the owner could simply be getting older and wants to slow the business down to lessen their load. With a new and vivacious owner in place, the business could easily go from operating at 25% capacity to 75% capacity and churning a much better profit.
Buying a discount business offers the opportunity to buy a business with limited risk and a very high potential for reward. If you are interested in speaking with a broker about how to buy a cheap business, schedule a free consultation today, or if you would like to receive cheap business listings straight to your inbox, join our newsletter.
Rachael Holstein has been the Marketing Manager for Transworld - Rocky Mountain since 2016. Her working experience has been largely focused on Business Development and Marketing in the finance, architecture, property management, and information technology industries. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree in Global Interactions from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high life!
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