Entrepreneurialism
Buy A Business In This Industry - And You're Almost Guaranteed To End Up In The Welfare Line
After 50 years of buying businesses I have become a huge proponent of buying manufacturing businesses over any and every other kind of business out there -- especially service businesses. The main reason is because they are safe (from an investment point of view), have little overhead and need almost no attention, since they basically "run themselves."
But many times I am asked if there are certain industries or types of manufacturing businesses which I would stay away from. The answer is yes. I would definitely urge anyone to stay clear of buying anything in the automobile industry.
Why?
Well, mainly because the automobile industry has exessive peaks and valleys.
What these auto companies do is they give you as thin a margin as possible and as soon as you get used to it, maybe make a slim profit one year, they?re back the next year trying to cut your price down.
So, it is very tough to make a good profit in a business like that. Plus, if you bring investors in, you?re going to have years where you don?t make enough money to get beyond the investors. In other words, there?ll be enough cash flow maybe there to pay a return to the investors...but you and your family are going to be out on welfare or something because there won't be enough to pay yourself.
So you have to stay away from not only the automobile industry...but any industry with peaks and valleys that are continually working on you. Just like if you were buying a company that was selling to Wal Mart. I mean you have to be crazy. Yes, your volume would be good. But, at the same time, they'll drive you nuts with their price cuts and gimmicks.
Bottom line: If you?re going to go after a business that?s making over $1 million (and that's the best way to go, in my opinion), my suggestion is to find one with proprietary products you can control. That way you?re not going to have the peaks and valleys...you're not going to have to guess what the newest gimmick is going to be...and you?re not going to have to spend all your time in there nervously trying to get this thing to make money.
Arthur B. Hamel has bought over 200 businesses in the past 50 years, and is a well-known author, consultant, investor, business owner, and dynamic lecturer who has shared the stage with such business greats as Robert Allen of "No Money Down" fame. For the past 20 years Art has taught thousands of people around the world -- even so-called "little guys" with no formal education or money -- how to quickly and easily buy large, multi-million dollar businesses with no credit, banks or prior business experience. He has recently decided to share his unique business-buying secrets and tactics free of charge at: http://arthurhamel.com
Art Hamel
Tags: buy a business, buy sell business, Franchise, business, business plan, business opportunitySimilar articles
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I will tell you the secret of getting rich on Wall Street. You try to be greedy when others are fearful, and you try to be very fearful when others are greedy.
Warren Buffett