Flipping for profit isn’t just for real estate entrepreneurs. Don’t miss this business flipping guide on what you need to flip your first small business.
Business flipping is becoming an increasingly legitimate way to break into entrepreneurship. The number of businesses available for sale regularly increases by 6.4% each year, like clockwork. 2016 saw a record number of business sales, suggesting that business flipping is coming into its own.
Selling a business for a profit has to be handled just right, however. Taking over an existing business also has its own particularities. To get you started with business flipping, we’ve compiled 10 things you need to know about flipping businesses.
10 Things To Know To Get Started With Business Flipping
Flipping a business isn’t as simple as starting a business and then selling it off a few years later, for a profit. Like flipping houses, flipping a business depends on a number of factors to be successful.
#!: Flipping Businesses Is Easier Than Starting A New Company
Starting a small business is a lot of work. There’s a reason that entrepreneurs used to follow the traditional business route. Not everybody gets an MFA before starting their first business.
Flipping a business means the infrastructure has all been laid for you. A business that’s already been established likely has its own logo and may already be a recognizable brand. The digital marketing network is likely already in place, so you won’t have to start your social media following from scratch.
#2: Business Flipping Is Similar To Starting A Business (But Easier)
Flipping a business starts out in a similar way to founding your own company. You simply identify a market that has the potential to be profitable.
Marketplace Home’s CEO Mike Kalis recognized a business potential in Detroit’s failing housing market. Their existing business model wasn’t able to turn a profit due to the falling real estate prices. Kalis took the opportunity to buy Marketplace Home and convert it to a B2C business for construction contractors.
#3: Business Flipping Takes Work
There’s no such thing as a get-rich-quick scheme. Anyone who claims otherwise is simply trying to separate you from your money.
Flipping a business is essentially just taking over a business that already exists. Or starting a small business and selling it for a profit. Either way, it’s still running a business.
#4: Flipped Businesses Can Become Profitable In A Short Amount Of Time
Most businesses get flipped because they’re running at a loss. Considering that many entrepreneurs simply run out of cash due to poor planning, that doesn’t mean that company isn’t viable.
Business flipping can often become profitable within 2 to 3 months. That’s a lot less time than starting a new business.
#5: A Lot Of Businesses Will Be Hitting The Market
Every year, 470,000 companies go out of business. Not all of them are going to be profitable, but some of them will be.
Going through the Census Bureau listings of shuttered businesses is a good way to get started with flipping a business. Or you can also seek out a trusted professional like Liberty Properties.
#6: Baby Boomers Will Be Retiring Soon
Roughly 33% of businesses in the United States are owned by people over 55. 76% of Baby Boomers are planning on retiring and selling their businesses in the next 10 – 15 years.
That means an additional 506,666 will be opening up, in addition to the 470,000 businesses that go up for sale each year.
#7: Do Your Due Diligence
Business flipping is the same as any other attempt to start your own company. You don’t just go blindly into it and hope it will work out.
Some Industries That Have Been Thriving In Recent Years Include:
- Health and wellness
- Data security and storage
- Customer relations management (CRM)
- Customer experience management (CXM)
- Travel
Do some research into the industries you’re hoping to break into. Industries are being disrupted daily so spend some time looking into innovators. It will help you come up with a fresh angle and identify potentially profitable investments.
#8: Buy Low, Sell High
It’s going to be hard to be profitable with business flipping if you invest too much at the beginning. Buying low and selling for a profit is business rule #1, and that hasn’t changed.
That means you’ll have to know the market value of businesses in that industry. That’s where your comes into play. You’ll be able to spot a good opportunity when it arises.
#9: Look For Cash Rich Businesses
You don’t want to have to wait for years for your business flipping to turn a profit. Keep an out for businesses that yield a respectable amount of cash income each month. This will help you keep up with operating expenses, as well.
You don’t want to look for businesses that generate too much cash flow immediately, however. Look for businesses that could be profitable in a few months, with some hard work and attention. It will be difficult to buy low and sell high, otherwise.
#10: Opportunity For Growth
You don’t want your business to go out of business in a year or two! It’s important to try and envision the future of the industry you’re investing in, to see if there is one.
With every industry being disrupted so regularly by digital technology, it’s difficult to predict what an industry might look like in a year or two. You’ll need to be a bit of a fortune teller in addition to a business analyst if you’re hoping to be successful with your flipped business!
Make sure you’re investigating the disruptors as well as the established industries. Just imagine if Airbnb or Uber had ended up on the market a few years ago. You never know what businesses are just waiting for their moment to arrive.
Flipping a business is a fantastic way to break into entrepreneurship. It’s like being given the keys to a brand-new house that’s all set up and ready to go. All you have to do is turn on the lights and start making money!
Ready To Start Making Money As An Entrepreneur?
There’s never been a better time to be self-employed! Digital technology has leveled the playing field. You could be playing against (and beating) the majors in no time! Take a look at our resources for and become your own boss!
