Buying a business in any industry can be a solid investment if you’re willing to put in some effort for both stability and financial return. Some people assume they can buy a business, hand off operations to others, and enjoy passive income. While this isn’t entirely unrealistic, it’s more likely that you’ll need to be involved— at least in the day-to-day — or at least week-to-week — operation of the company before you make plans to travel on the profits while someone else is left with the work. Here are five reasons, including developing a passive income, for investing in business ownership.
1. You Create Opportunities for Yourself and Others
Unlike traditional investments, buying a business gives you direct control over your future. You’re not just putting money into a portfolio and hoping for a return—you’re actively creating opportunities for yourself and those around you.
Buy a business and you create automatic employment for you and potentially for family, friends, or former colleagues. However, it’s important to carefully consider whether hiring loved ones is the best decision, as mixing business and personal relationships can sometimes be challenging.
Regardless of how you structure your workforce, business ownership provides immediate financial benefits, including salary and perks, while allowing you to grow your investment.
2. A Business Lets You Invest in More than Money
For many people, the investment isn’t completely about money. Individuals who buy businesses might be looking to invest in a brand, an idea, an industry or a community. Owning your own business lets you leave a legacy behind through loyal customers, employees and a brand that could earn money for heirs years into the future.
3. You Decide Where the Profits Go
As investments go, buying a business is risky. In some ways, it’s much riskier than investing in annuities, stocks or even futures. With that risk, though, comes freedom. When you invest in stocks or other marketplace assets, you can’t decide what happens to all of the profits associated with the investment. That investment is in another company or organisation; if that entity turns a profit, it then decides how much of that profit is shared with stockholders. If you own a business, you get to decide where profits go, and as long as you go about it legally, they can even end up in your pocket.
4. Selling the Business Later May Be Rewarding
Many entrepreneurs buy companies with the intent of “flipping” them, which means putting in some time, work and resources to increase the business’s value before selling it for a profit. Again, there is some risk associated with this practice: The market could turn quickly, and what seemed like a lucrative business becomes worthless. Experienced investors know what signs to look for, though, and tend to make investments in companies that are likely to weather ups and downs. For example, with the ever-expanding New Zealand tourism industry, accommodation businesses are in demand and make a great investment for the right buyer.
5. Passive Income Is Possible With Proper Planning
As previously mentioned, with some hard work, a lot of planning and at least a little luck, passive income is possible for business owners. To make this a reality, you have to find a viable, strong business opportunity, create processes that are easy to emulate and maintain, and find leadership you can trust to handle the company for you. If you wouldn’t trust a person with your wallet for a month, then you probably shouldn’t trust them with your company.
Buying a business certainly isn’t the right investment for everyone. But entrepreneurs looking to work hard and get a decent return in the form of financial gain, recognition and branding, ownership perks or community involvement may find it’s the right deal for them.
For Further Information about this article, contact your nearest LINK Business Broking office at:
