Herman: John L. Herman Jr., Author

What do you buy with nothing?

In a recent post I talked about acquiring a troubled company with assets in excess of one million dollars. Out of most buyers reach for sure. So, what kind of business can you start on a shoestring…with a budget of next to nothing?

I was always looking for any business opportunity, always reading the Business Opportunities section, even when I was broke. If a company was listed by a Broker I always passed because the price had to be high enough to pay the owner something and usually a Broker wanted his ten percent. I wanted to buy a business with just his ten percent.

One day I was in a gas station and the owner wandered out to the pump to say hello. His station was spotless. The floors of the work bays were polished and clean. How was that possible I asked? He said he was tired of working on cars and gave up on that and he would sell the whole damn business if someone would just buy his inventory. I wrote a check for five thousand dollars immediately and set a date to count his stock, measure his gas in the ground, and take over the place. In total, he got thirty thousand dollars and I took over a lease on a Mobil gas station pumping 80,000 gallons of gas a month with two bays to work on cars, and a full tank of gas in the ground with a reasonable amount of motor oil and filters and belts and hoses on the wall.

In essence I paid nothing for the business because I got full value in goods to sell. Yes, I did lay out thirty thousand dollars of cash, which I am certain I could have bargained over time but I had the cash. About eleven months later and after making close to my original thirty thousand dollars back in profit, I sold the business to another guy for the cost of all product on hand, plus one hundred thousand dollars. Pure profit above inventory. We had grown the business to 100,000 gallons per month and added a muffler shop inside the bays with equipment I purchased from a failed muffler franchise. And that’s another way of buying cheap…failed franchises can be had for a fraction of a full franchise cost…but check with Joel Libava first, as he is the Franchise King.

This is just one example I can give which shows you must always be looking. Talk to business owners when you visit their place. Catch their mood, ask them if they like the business, even if it’s not what you want to buy. One Baskin Robbins guy would have sold me his shop for next to nothing, but I couldn’t see working with so many kids giving away my ice cream as the owner said every night the place was packed with their friends…who never paid full price for anything. Soon we will discuss buying a business at auction…another cheap way to go.

• Posted: 25 November 2007
• Comments: 1
• Category: Starting a business

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