Buying a Sub-Par Business

Every business that's for sale is not rolling in profits and on the track to future success. Some of them are actually on the verge of closing with the current owner and management. And that could be the reason that it's not really successful right now, The owner may be tired of the business, have medical issues, be older and  wants to relax or any number of reasons. That does not mean that the business is not worth buying if you think the concept is still good but needs a little work. Take a close look and see if it can be salvaged.

If it has been open more than 5 years there must have been some profitably times to keep it going that long. If the industry is still reasonably strong and customers/clients are still around and within reach it may be worth a second look. A very successful business will have a high price tag based on that success and you must pay more to get it. A less or no profit business will be priced much lower because it needs ideas and work to turn it around which the current owner doesn't want to do. In the long run the less profitably business will give you a much better overall return and resell much higher when the situation is better.

My wife (before I knew her) bought a mail box store that was failing and close to being shut down for half of what a more profitable store would cost. She was on her own with 3 kids to raise and get them through school. She immediately gave it a little facelift inside, added more box sizes, additional merchandise she purchased wholesale and offered longer open hours. She was very friendly with customers and did little extras for them and small discounts for loyalty. Within a year she was more profitable and it was more growth from there. She put 3 kids through college and the store is worth about 5 times today what she paid for it. Don't be afraid to take the challenge if you are up to it.

Barry is a marketing and customer experience speaker and trainer. www.idealetter.ccom