'Safe' Businesses to Buy into

Hey OzBargain,

What kind of businesses do you think are good and relatively safe to buy into as a part owner?
I'm considering all options at the moment such as franchise options, local post office, health stores, etc.

I have years of retail experience, some capital to play with, and a house that is mostly paid off but haven't been able to take a leap into business yet.
Open to all suggestions and thoughts.

Cheers all

Comments

  • +5

    I recall a girl opening a photography studio. She may need a business partner to buy a camera.

    • +1

      Low risk, low overheads. It's really easy to do as well.

      • +14

        Not sure I've got the body for onlyfans but I'll keep an open mind

        • You'd be shocked at what people are prepared to pay for. Just look outside the e-thot-sphere.

  • Define “some capital” and I’ll define what is available.

    • +1

      I'm no millionaire, only about 150k. I'd be willing to get a business loan for the right opportunity though.

  • +3

    McDonald's franchise

    • +8

      150k wouldn't even be a deposit on a MD franchise…

      • +1

        7 figures and not every Micky D franchise makes bulk coins - strange but true.

  • +7

    I have years of retail experience, some capital to play with, and a house that is mostly paid off but haven't been able to take a leap into business yet.

    Don't use your house for any part of the business loan/finance. Unless you want to lose it.

  • +1

    Assuming you need income as an employee, not just a silent partner?
    The trouble is, few businesses are "safe" in that they will be guaranteed to be around in a few years.
    Most have risks around leases - is a cafe worth anything if you need to relocate to another address?
    Is a post office going to be the same business in 10 years time?

    I think you need to look at it from the point of view of an investment. If I invest $150k, how long to pay back, how much is the return each year after that? A lot of people would rather have no boss, so will work for barista pay in their own cafe.
    Good on them, but it isn't usually very financially astute.

  • -1

    Tattslotto Agency
    Australia Post Agency
    Most major Fast Food chains
    Storage
    car parking

    • Is an Australia Post agency a good earner? Our local suburban one (as part of a newsagency) seems a hard slog, husband and wife working from dawn 7 days a week.

      • It is if run correctly.

        The best as ones that have tattslotto attached to it. Both strong earners IMO

  • +3

    What kind of businesses do you think are good and relatively safe to buy into as a part owner?

    There are exceptions, but generally, it's the operator, not the business category that determines the success.

    You also need to define what relatively safe means for you?

    I have years of retail experience, some capital to play with

    Retail is considered a tough arena at the moment. Typically it has a high capital investment and is having issues from online competition which may hamper exit opportunites… and those damn pesky deal sites can make it hard to earn a decent dollar, though if you're in the right niche, do it right, you can earn some serious coin. Enough people still like to do business face to face.

    What area do you consider to be your strategic advantage that you can bring to the table? Where would your edge come from? Once you can work that out, you can start to work out where you should start looking at your opportunities.

    It's a bit of a voitile time. That does mean there are good opportunities to both ring up substantial profits and significant losses.

  • +2

    Covid is here to stay. Covid is the death of retail shops.

  • Why not open a Tyre fix/Replacement yard ? - or buy in one of the tyres franchise ?
    Now with Covid cases and safety still around us - and due to the fact that every one got second car and not using public transport
    every business with connection to car parts will flourish …..
    But you need to look at rent prices for the right place - good luck …

    • Problem with those places are, unless you're licenced mechanic or hold the right licence then you'll be at the mercy of your employees who have the required licences. You literally handed your balls over to your employees to their advantage.

  • +5

    There's always money in the banana stand.

  • +3

    Aged care services (and to a lesser extent, disability support services *see bottom paragraph) are growing industries [look at how much of the population are becoming seniors, and living longer].

    There's a current perception that there's some small-time cowboys and bottom feeders getting fat off the (current) low-oversight approach…. much like with the financial services industry and the daycare center situation a decade back. This brings with it its own share of risk/reward:

    It's one (or two) major scandal away from a Royal Commission style crackdown which will flush out (and hopefully punish) the cowboys.. which will give the surviving businesses a larger share of the pie/customer base to work with - but they'll be working in a much more accountable/watched environment. Honest providers don't lose much sleep over this, of course - though increased regulations and compliance costs makes honest business harder as well.

    The industry is multifaceted however - a franchise offering some sort of Meals on Wheels service would have a different business model/risk area than one offering inhome nursing/treatment, or carer support.

    *NDIS is about a 22 billion dollar industry, as an example. Former worker John Higgins in the NDIS fraud taskforce said last year up to 1 in 10 claims to the NDIS could have been fraudulent. In the first 2 years of the taskforce operating, 909 complainants were reimbursed $3.8 million in fraud cases, but there were only 3 criminal convictions. And so on.

    • This NDIS gravy train looks really promising.

  • +1

    Its the age of convenience now.. i think a small fast food chain with a focus on drive through would do well.

  • +1

    Nothing with disposable goods, nothing with high or specialist staff or rent costs/needs (unless you are the specialist and it creates a high barrier to entry), something with a monopoly or restricted access, govt support is good until it isnt (taxi, child care), nothing that is 7 days/nights unless a premium is paid. Goods or services ? Goods needs stock so get your margins right and just in time stock if you can (CV stuffed everyone there). If partnering with someone (more bad than good) try to find someone who makes you feel lazy eg they are fully committed. Plenty of people working in a business that could run one but dont have the cash or guts, maybe you are the semi silent partner, providing advice and support but the work remains theirs, so you can still work elsewhere too. Doesnt have to be sexy, just regular demand, a margin, less competition, perhaps a barrier to entry (skill, experience, equipment, location, time, product access). Have seen people do well out of…garden maintenance, dog grooming, fix a dent for cars, window tiniting, MV niche mech repairs, wholesaler for specific products, homestyle take away food, making cement pavers for Bunnings, metal letterboxes, mobile phone repairs, coffee market stalls.

  • +5

    Most businesses fail. If you’ve ever run a business you will understand why. Many many factors at play. Actually finding, let alone picking a “winner” is as much about luck as it is about truly understanding what you are investing in.

    There are no safe options and it’s pretty much a roll of the dice, even for the big venture capital funds. They have enough experience to know the fundamentals for success but even they get it wrong…7 out of 10 times a loss, 2 times out of 10 break even and 1 time out of 10 make money. They can afford the losses because they have enough capital to diversify such that they usually end up somewhere with a winner.

    If you only have $150k to play with, have no experience running a business and you haven’t paid off your house my suggestion would be this:

    1. Pay off your house. That interest expense is dead money.
    2. Invest the remainder in shares across a diversified set of companies.
    3. Go get experience running a business on someone else’s dime as a wage slave e.g. join a startup. Hey you might even get equity! Then a few years from now consider putting your own capital on the line.
  • +4

    Video shop but make sure VHS not Beta.

  • +1

    150k won’t get you a post office. You can buy yourself into a franchise but that’s a sole owner operator or a few staff

  • +1

    Professional investor criteria (look up "search funds")

    Large EBITDA margin
    Stable and consistent cash flow in a non-cyclical industry
    Low capital investment requirements

  • +3

    Sorry to say it but you have peanuts to invest. If you risk your house then be prepared to lose it if things go wrong. Here’s what NOT to do:
    ANY Franchise - the model is broken
    Any failed business that you think you can fix
    Any business that is offered with add backs on the balance sheet. This is to pretend you will make more money than the previous owner did.
    The best option for that kind of investment is to partner with some other party or parties. But you need a rock solid agreement as to what is what and who is who and stick to it.
    Lastly - businesses that make money are the safest bet. If the books don’t show a sustainable profit then they are either dogs or you can’t trust the seller. There may be some bargains out there because people were over geared to outlast the pandemic but you risk the same if you step in their shoes.

    The best business person is the one that thinks innovatively and is prepared to work as much as is required. 9 to 5ers will not qualify.

    Finally: 70% of people would like their own business. The other 30% want out of theirs.

  • +2

    If you have business acumen as you say, then you should be already investigating "THE BOOKS"…
    Unless it is a MacDonald's joint, many franchises are a complete rip-off.
    Post Office, honestly… how much profit do you think is in a stamp?
    Are you in the "health" industry - do you know what sector you would like to go in?
    I don't think you have what it takes.

  • +2

    Post offices' days are numbered - used to be able to buy stamps at a steep discount (IIRC 60 cents for $4 value), now they're stuck with too many parcels that are being carded which takes up real estate and it gets paid SFA to process these carded parcels. I suppose the only saving grace is [email protected] or whatever that's called.

    • +1

      I thought these outlets have commission for each parcel collected or received. Is that not true?

      • +1

        it gets paid SFA to process these carded parcels

        Less than a dollar per parcel processed for a couple of minutes work. Worth it?

        • Certainly not for someone who can earn better coins.

  • +3

    For ur budget Coin laundry might work. Just check rental terms and machine age/type. Then sit out side the shop for 7-10 day calculate number of customers, type and volume.