The Tribune

By SIMON COOPER

Res Socius

AS the only business broker in Nassau, I come across many different models for small businesses. Some work, and some do not. Others nest themselves neatly in a particular niche and are successful. The solution is finding a variation that both matches market requirements and the buyer's aspirations, too.

This week we look at the balance between high-volume, low-priced products, and having bigger-ticket, better quality goods for sale - and how to decide what's best for you if you are considering buying a business for sale in the Bahamas.

Two Extreme Examples

Company A and Company B are both in the personal transport business. Company A sells basic bicycles on which it grosses $250 each. After all expenses, it nets an average $15,000 a month. Company B is in the business of selling luxury motor cars, which gross $30,000 each. However, it only breaks even with Company A at three sales a month, after allowing for far higher expenses.

There are other differences between the two companies as well. Company A employs an assembler because the bicycles come completely knocked down from China, and a free service after the first six months. Company B has a luxurious showroom where it has a franchise to sell fully-assembled luxury cars. All servicing and repairs are at the manufacturer's or the customer's expense.

Other Things

to Consider

While you may already be licking your lips at the thought of buying a business for sale like Company A or Company B - keep in mind they're both fictitious - there are several other things to consider besides the basic business model.

Market Size - People buy businesses for sale to grow them and turn a profit after earning good money. If you were weighing up the choice of basic bicycles versus luxury motor cars, you'd do well to consider the likelihood of competition emerging in the future, too.

Profitability Curve - Average net profit per sale goes up as sales increase. This is because your marketing dollars are more widely spread, and you start getting referral business, too. Company A could withstand a 10 per cent drop in sales, unlike Company B, where one car sale less a month could drive it into loss.

Pivot Possibilities - Company B would have difficulty morphing into a related market because this could confuse customers and irritate the franchisor. Company A's customers, on the other hand, might be delighted to know that they could buy motorised bicycles and car tools there, too.

Which One's For You?

The first question to ask when considering a business for sale is whether you prefer the noisy activity in a busy cycle shop, or the tranquility of a luxury car showroom. Do you like speaking to multiple customers, or would you prefer luring just a few in every month. Only after you decide what suits you personally does a due diligence become your next step to think about.

NB: Simon Cooper is a founding partner of Res Socius, a business brokerage firm and businesses for sale directory service. Res Socius is authorised by the Bahamas Investment Authority to facilitate the sale and purchase of businesses, and provide consultancy services. Contact 376-1256, visit www.ressocius.com or scan the QR code below.