Partner Article

Cupcakes or e-commerce; where you should invest

From cupcakes to cookies of the web kind, choosing a profitable sector is key to making a successful small business purchase. The following five business sectors were the mostly widely searched this year (based on website traffic statistics for www.businessesforsale.com).

Sarah Louise Dean outlines what makes these industries so attractive to the small business buying community. Sarah is the Head of Social Media at Dynamis, the company that owns BusinessesForSale.com and FranchiseSales.com. She champions small businesses in all sectors - striving to make the small business landscape hassle-free and without jargon.

1. E-Commerce Businesses

Somewhat unsurprisingly, online businesses are the most searched for category of businesses to buy. The internet grows more important to both the business and consumer communities with each passing year. As a business proposition, its popularity comes from a combination of low overheads, ease of market entry (especially when selling niche products) and an opportunity to provide truly global from the comfort of a home office.

That’s not to say that this type of business is risk-free. Andrew Markou, CEO of businessesforsale.com says that online customers can be “inherently disloyal and fickle about the services that they use. So as an online business you have to work very hard to secure the loyalty – and it has to come back to good value.” That provision of good value can arise from outsourcing the roles involved in running an online business, from manufacturing of products through to customer services. What also marks online businesses out as attractive to buyers is their ability to work within a 24-hour business cycle. An online business owner decides how and when they want to work – so it fits around their life and not vice versa. By buying an internet business SME owners benefit from the base technical core already being in place making them both the cheapest to acquire and the easiest to run of all the sectors mentioned here.

Asking price of currently advertised businesses: £250-£4.5Million

2. Convenience stores

The convenience store, or corner shop, is an instantly recognisable part of UK retail culture. There is something comforting about the always-open retail unit selling cigarettes, magazines and confectionery. This is a simple business model where keeping regular customers happy provides a steady income.

It’s also attractive to buyers who do not have formal business experience, as with some basic training in inventory stock check, elementary accounting skills and an understanding of the long hours involved, most can comfortably run this kind of business.

What also marks this type of business out as a good investment is its potential for subtle expansion and diversification. Existing stores are stocking groceries and wines enabling them to poach customers from supermarkets and wine merchants. Convenience stores are often family-run allowing owners to employ family members as staff and providing a stable inheritance. Finally, it’s a sociable, community-focused job, enabling owners to make a mostly stress-free lifestyle choice.

Asking price of currently advertised businesses: £3,000-£1Million

3. Bars

Owning a bar is ideal for business buyers wanting to mix work with pleasure. The world’s love affair with alcohol has not been dampened, instead pub culture has evolved over the years to appeal to different consumer needs. There are high-turnover gastro pubs for those wanting a restaurant-style dining experience as well as cocktail bars for customers willing to pay a premium for sought after spirits. Although margins on products can be tight and legislation does not always best serve the bar owner, this industry makes in the region of £18bn in annual turnover. Buyers wanting to run their own pub can also become a licensee of a reputable brewery, providing them with business support and training.

What cannot be quantified is the love that bar owners have of the drinks business. A bar is more than just a small business, it can be an extension of its owner’s personality, allowing them to provide joy to customers while earning anything from £28,000 to £100,000 a year [eHow]. Frequent customer interaction and, often, a built-in residential property - makes this an attractive prospect for buyers.

Asking price of currently advertised businesses: £2,000-£2.8Million

4. Holiday resorts

It’s surprising to find this so high in the searches, but, as the country claws its way out of recession, holidays are slowly creeping up as more than just a luxury. And by purchasing a holiday resort, hotel or guesthouse, buyers have a market already in place.

Location is absolutely key to the success of this business, but the value of Britain as an international tourist destination in the wake of a Royal Wedding and the London Olympics serves to sustain the popularity of this sector. The UK is crammed full of heritage sites, recognisable monuments and a rich cultural history, meaning that buyers can tap into the emotions of tourists.

Running a holiday resort enables a buyer to live a life outside of the rat race while still providing an income, and in some cases, if there’s a profitable high season, the owner can live off the proceeds during low season. And the added appeal of a holiday resort purchase comes from the value of the related residential and commercial property – which can retain or even grow in value. The sweetener comes from Visit Britain, which has forecast growth in the UK hospitality sector up until 2020.

Asking price of currently advertised businesses: £8,000-£5Million

5. Delicatessens and bakeries

60% of all Brits buy a sandwich from a deli at least once a year according to [startups.co.uk]. A rise in international shoppers demanding an array of cake and sandwiches between department stores coupled with the decline of the office lunch hour has led to a rise in a need for take-out options.

A food retail business also has the ability to diversify, into catering for example. Again, this business is attractive to buyers as the skills needed to run a deli can be easily acquired. Delis also do not require huge square footage to turnover a profit but they do require a great location for footfall. Deli and bakery businesses also appeal to parents as this sector often allow owners to finish early.

Finally, this business has tapped into a national zeitgeist. An obsession with baking television programmes has positively impacted on sales with 110million cupcakes sold in the UK last year [Daily Mail].

Asking price of currently advertised businesses: £5,000-£595,000

This was posted in Bdaily's Members' News section by BusinessesForSale .