An under-utilized investment channel
You've got your "safe" investments, your diversified portfolio, but what else is there?
1. Money markets? Savings accounts? .95%? Yawn.
2. Government bonds? .3-2.8%? Great for a sliver of your worth.
3. The stock market? Obviously, but either you are diluted through diversification or you are at high risk in a business or set of businesses that you have no control over.
4. The freezer. My grandpa's style!
5. A local, profitable business! Many business owners have built a successful business, been profitable for decades, and are now retiring. Many of these businesses can be run by existing staff and you can become an absentee owner.
There are hundreds of businesses available around you right now for purchase. They are making money today and have been for years. They can generate immediate ROI with 2-3X return in the coming few years by simply picking up the business as an ongoing concern with the current staff, equipment, inventory, and lease or building.
You'll see proven documentation of their success from their financials and tax returns, so you have little risk (unless you make dramatic changes). They can be small manufacturers, service businesses, pawn shops, retailers, yogurt stores. You'd be surprised how much your local mini-mart can earn in a year.
For an even better return, you can get a great deal on a business that might be little dusty. With a little sprucing up, some marketing, new offerings, hours, or remodeling, revenue can be doubled in a year or two. Many of these businesses are $80-$200K and many even offer seller financing at 7-10%.
Because the small business is local, you can keep your eyes on it whether you are an owner/operator or you hire a management team and keep your full-time job. I have many businesses available in Seattle's Eastside and South--even franchises that are selling their location.
Time and time again, we see a better outcome in existing-business acquisition scenarios than startups launching from scratch and working for the first three years just to break even!
Skip the painful start and hit the ground running where someone has already plowed the starting-year ground for you.
I'd love to share some of the stories from investors who took the step to take on an existing business