Hey I’m Ben from Motivation2Invest our mission is to help motivate you to invest for your financial freedom, whether that means escaping the 9-5 drudgery or just improving your life.
I’m here to help you by providing you with valuable investing tips & strategies.
If you watched my previous video on 5 reasons to invest into a small business such as local shop, gym or restaurant you will know that an investment into a high quality business of this type can offer MUCH GREAT returns than the average 8-10% achieved by the stock market!
Small businesses seem like the perfect investment, high returns, passive income and much more fun!
But one of the major challenges is just finding great small businesses to invest in at a fair price.
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So in this video I’m going to take you over my shoulder and show you 3 ways to find small business investments!
LETS DIVE IN 😊
Let’s get into it!
Method 1. Online Brokers
There are a variety of online brokers in the U.K which offer small businesses up for sale. These act as a middle man and many vet the business accounts prior to investment.
They in turn take a commission from the seller if the business sells.
A popular broker in the U.K is blacks.
As you can see it offers a variety of businesses for sale from corner shops to bars, restaurants, hairdressers and even humble fish & chip shops.
The majority have their turnover show and other relevant figures about the business.
(I was shocked to see some humble corner shops with revenue upwards of £900k! )
A purchase of the business usually just gives you rights to the lease, trading name and all equipment/stock the business owns.
Some have staff which will happily stay on while many one man band businesses will require you to hire a new team or manage the business yourself.
Before investing be sure to ask this crucial question.
“Why is the business owner selling?”
This is key, as if they are selling because there business is failing then that is not a good sign for you, unless you spot a part of business where you can add value.
For example, if a corner shop is failing because a Tesco Express has opened up opposite you will find this very hard to compete thus it would be best to steer clear.
However, if the business is failing because they just need some cosmetic work or minor renovations then this could be a potential opportunity.
The ideal reason for someone selling is those who are just retiring or moving away. They would love to continue running a profitable business but now wish to pass on the batten.
Method 2: Facebook Groups
There are various small business Facebook groups where you can buy & sell businesses. Like previously be sure to ask the same questions, have the accounts vetted & fully understand the business before investing, including what may be required of you & lease commitments which can be 5 years +.
It’s also a good idea to negotiate a handover period where the existing owners will stay on & run the business for a short time to inform you of how it’s run & communicate the transition to it’s existing customers.
Method 3: Word of Mouth
Word of Mouth or networking is the best way to find great small business investments.
Hearing it through the grape vine can often give you a head start on any negotiations before these businesses are put up for sale with a broker.
Final Thoughts:
Small Business investments can create incredible returns, passive income & are great fun to be a part off.
However, you must be aware of the risks, your commitments & fully understand the business.
For example, An investment opportunity which I nearly invested in was a stylish barbershop of which the owner was moving to Australia.
The shop had great design, great revenue & a loyal customer base.
However, because the barbershop was in a small town & run by a one man band. I knew any transition period would be difficult.
People are loyal to their barber so me just hiring someone new & changing the shop name would have been a huge risk.
Especially, due to the fact that I’m not a barber so if the person I’ve hired was ill or wished to go on holiday, the shop would have to be closed.
In addition, the barbershops location was in a different city than I lived. On balance I decided to decline the offer.
They say the best investments are the ones you walk away from.
However, If you can secure a high quality small business investment which ticks all the boxes then you will most likely be in for fantastic returns & can even franchise the business out & scale to the moon!
Be sure to check out my other videos on the free trading investment apps, which give you easy access to the stock market instantly!
If you enjoyed this video, Smash that like button, comment your thoughts below & definitely subscribe!
See you next time! 😊
