When thinking about what your next business will be, it pays to think outside the square.
Thinking about owning your own business? It pays to think outside the square. We have all been told that doctors, lawyers, stock brokers and merchant bankers get rich, while nurses and teachers don’t. But when it comes to making money from your own business, it is often those outside the mainstream that are the most profitable.
One of the fascinating things about watching the business-for-sale market is the incredible variety of businesses that have found a profitable niche in the economy, and some of these niches are quite substantial.
While the revenue and price can provide an idea of scale, sometimes it is the details that provide the true perspective. For example, a Victorian poultry business that includes an egg sorting and packing machine with a 4000 dozen per hour capacity – this is certainly more than a few hens out the back door.
If on the other hand you are more concerned with life-balance rather than just the balance sheet, then there is the Barrier Reef tourism business that includes a 40 foot motor-sailer with decent income and a tropical lifestyle thrown in. At about the same value as an average house in the inner suburbs of Melbourne or Sydney, it might just tempt you to leave the rat race.
For those wanting to be part of the mining industry, without being part of a mining company, there is a mining services business that is a major contract provider of abrasive blasting, protective coatings, painting, safety signage and maintenance with the mines and engineering facilities in the Bowen Basin and Mackay area. Alternatively, if you are wanting something closer to home and requiring less safety gear, how about a children’s indoor play centre or a golf course complete with clubhouse.
This eclectic collection is just a random sample. While retail and hospitality provide the face of private business in Australia, there are far more profitable businesses out there in all shapes and sizes that might inspire you to think twice about what type of business you want to own.
On the other hand you may have a vision for a business that you want to start. Before you start building it, take the time to look at whether it or something similar already exists.
Even if you decide to start from scratch, knowing what is already out there can help you to refine your business model and pricing structure. Remember there are few genuinely new markets, but lots of old ones constantly being reshaped and refined. With this in mind, as a general rule of thumb you will get better value out of reshaping an existing business than starting a new one.
Hopefully this window shopping exercise will inspire rather than confuse you. Either way, it will have cost you nothing. If you genuinely want to be a business owner, then researching the business market is a great way to start.
But don’t just look at the variety of what is on offer. Try and gain an understanding of the scale of business required to provide you with an ongoing income stream, also consider the skills required of the owners and relate this to what you can bring to the business. Another consideration is the hours of operation and how this matches your preferred working hours.
Finally consider the cash-flow implications and predictability of the various sorts of businesses, and what you and your family can cope with. Perhaps the most extreme example of this is crop farming, where they receive all their income from an annual crop sale with the price and volume of the crop largely out of their control.
It is not that farming makes people laid back; it is just that only the laid back can cope with this sort of financial stress. If you are starting a business from scratch, be prepared for a negative income stream for the majority of the first year, and no certainty that it will get any better. By buying an existing business, you can at least budget against past performance and cash flow and finance the business accordingly.
One final source of inspiration – every time you, a business or government spend money, it is a revenue stream for someone. Do you think you can find a profitable and enjoyable way of providing what is being paid for?
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Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
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