5 Reasons You Should Buy a Business as an Investment

Truforte Business Group - Brokers Blog

Why should you buy a business as an investment? Businesses, both large and small, are a significant investment vehicle for many investors. After reading this list of five reasons to buy a business as an investment, you will see why.

1. Hands on control of investment risk

Unlike the stock market, buying a privately held company can often give buyers better control over the risk. One example is that franchise businesses have a lower failure rate than non-franchise businesses and thus offer lower investment risk. Just ask McDonald’s Corp.; they’ve been one of the most successful franchises in America for more than half a century.

2. The valuation of the business may have huge upside

Many real estate investors are sitting on vast piles of equity with little to show for it. Though they may make a decent living, their cash isn’t making them more money, and they aren’t growing their net worth or building long-term wealth like they could be doing by investing in a privately held company. So it’s time to stop thinking of real estate as a primary place to park your money and start thinking like a business person. Instead of focusing on the perceived security of an asset, think about its potential for growth and income generation.

3. A new buyer means a recent valuation

When you buy a business as an investment, the best time to sell is not always right away. Growing the business and creating a history of strong earnings or reoccurring revenue can have a tremendous impact on the business valuation and you won’t have to worry about it losing value before you can sell. You’ll also be able to take advantage of the most recent valuation, which will give you a better idea of how much money your business is worth.

4. Wealth creation and transfer is easier than ever

Regardless of the current economic climate, selling a business as an investor is easier than ever. There are some fantastic tools that offer a myriad of value-generating opportunities for businesses. For example, a tool like EZ Valuation can help you create a valuation on your business, although contacting a Business Broker who is familiar with current market conditions will give you more insight into your company’s worth and be able to let potential buyers know exactly what they’re getting for their money.

5. Business Brokers will find a buyer when it is time to sell

These days, it doesn’t matter if you have a ton of experience in the business industry or none at all; a Business Broker can help level the playing field for entrepreneurs and buyers alike. Business Brokers will usually have buyer and seller contacts and can help potential business owners with people seeking to buy their business as an investment, or can connect buyers with good businesses to buy as an investment, in either case working with a Business Broker will allow for a smoother and more straightforward process. When you’re ready to sell your business as an investment, make sure you have the tools to help you do it properly and make sure that the idea of selling makes sense for your lifestyle goals.

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