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Purchasing a profitable, physical business?

Discussion in 'Starting your journey' started by anspasha, Oct 19, 2020.

  1. anspasha

    anspasha Member

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    Hey guys,

    I'm new here. I have seen the flying solo forums in the past and read a few threads, but haven't really been part of the forum for years. I became interested recently to join because it's Australian and was looking for some advice in purchasing a business.

    I have been browsing some listings on Seek Business. I can see that there are actually quite a few profitable businesses for sale. I have mostly done internet marketing the last 5 years and built an affiliate website which generates some income, but its not exactly stable, and not enough to currently live on.

    My questions pertain to actually what I should be looking out for when looking at a profitable business to buy.

    For me, it seems too simple that you pay a certain amount, then make a reasonably stable amount of profit per week.

    I am a skeptic at heart, so it feels as if I am missing an important part of the puzzle - if the business is generating net profits of say, 4k per week -- what are the pitfalls of buying it?

    Please take this for example:
    https://www.seekbusiness.com.au/business-listing/newsagency-gold-coast-area-sales-28-000-p-w/444534

    If I could get the funding, this would seem a fantastic business to buy. Long term customers, good location, good cashflow.

    I would also love any advice on who to talk to, to ensure the business is generating what it claims, and what kinds of pitfalls there are if I theoretically invested in a business like this.

    Any help is appreciated, thank you in advance.
  2. LucasArthur

    LucasArthur Renowned Member

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    Howdy,

    Am not going to put the link as i feel its irrelevant and almost makes your post look like a spruik for it.. although in regards to what are the pitfalls, if a franchise, may include you could be buying a job...

    My comment sounds simple, although you need to evaluate what you want from the business and can the business offer it? Free time, money, support etc etc

    Happy hunting
    Paul - FS Concierge likes this.
  3. Dave - FS Concierge

    Dave - FS Concierge Administrator Staff Member

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    Good question @anspasha,

    As Jason has hinted, how do you want to spend your time? A business like that might not be for everyone (repetitive work, working 7 days, etc).

    A few other things I'd be checking...
    • Profit $208k p.a. but is that increasing or decreasing the last 5 years?
    • Many print publications are struggling. What does this mean for newsagents in coming years? What's happening in the industry?
    • Why are they selling?
    Not trying to be negative, but since you asked :)
    Dave
    Paul - FS Concierge likes this.
  4. anspasha

    anspasha Member

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    Thanks for the responses guys.

    Yes those are excellent questions, print is definitely not in fashion anymore. That is a point I didn't really consider. My goal would be to have more free time, although I would be happy to learn how the business works. And consider hiring someone to deal with most day to day things since the business is already profitable.

    However the cashflow over a few years time is something I didn't consider. These are all great questions to be asking when considering a purchase... thank you both for your help.

    Is there a good book or resource anyone could recommend where I can le
    arn what I should be looking at when buying a business?


    Thank you again!
    P.S. I had to google what a "spruik" was, this is definitely not that!
  5. Paul - FS Concierge

    Paul - FS Concierge Administrator Staff Member

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    A lot of business brokers have blogs. A lot of the blogs will have information you can use.

    In the example you gave, the weekly hours are huge and the ad doesn't mention if there is family working there.

    The nett profit advertised is probably not a nett profit at all but a gross profit before taking account of payments to owners.

    Note also, the lease has only at best, a few years to run.

    Cheers
    Paul
  6. bb1

    bb1 Renowned Member

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    Firstly do you believe any of the figures presented, look back at the last 5 years of figures, the last years are generally over inflated and nonesense.

    Good luck I hope you sell the business

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