Hello dear mustachians!
Out of curiosity is someone of you business owner?
If yes, did you started it? Did you bought it? Or was it already in your family?
Like buy real estate buy a business is a form of investment and I wander if someone of you has experience with it and want to share his story.
Another interesting point would be to know if you also work on it, you just manage it or you let manage it to someone else
I am a business owner. Started the company and I also work in it (IT sector)
Question is: what are you interested in? Do you want to buy a business? Are you interested in the cash-flow, do you want to know how to create a company?
Following. I am interested in starting a business within the MedTech world.
First thought: MedTech might require a good amount of capital. If you start an IT company, the capex costs are usually quite low.
I have currently quit my job and I am traveling the world for 6 months at age 33 with my girlfriend. I am interested in starting or acquiring a business (with money from a bank) as a possible next step once I am back instead go back to a corporation. My background is electronic engineer.
What is holding me back from starting a business is the feeling of “not having a right idea”. Start a successful business from scratch require a good idea beside dedication and luck to survive the startup phase. What inspired your business?
I think anyway IT is probably one of the best sector to start as software as lower cost you need to invest. If I want to produce cars for instance: I need to invest initially 20-30 million, for IT I guess we are on the order of 10-50k to start.
The idea of acquiring a business appel me more as it may require less effort.
-Clients already know and relay on your company
-The cashflow is already existing.
-if the business is good enough you can buy it and make it manage by someone else and be basically just the owner.
-I imagine a business can be used a bit like real estate. I buy one, and it is the guarantee when you ask the bank money to buy a second one.
-the business already survived the startup phase (where 9 out of 10 fail) especially if you buy from someone who is gonna retire the business may have even 30 years of history.
Lately trough social media I have learned the concept of “boring business” which beasically consist on buying business that are not sexy like “tech company”. The problem is that is more a US thing so the example they give I doubt can work in Switzerland.
Here the exemples:
-laundromat (there is a wash machine in every Swiss house so it will not succeed in CH and you will not find one to buy)
-Automatic sell Machine (I think we have a kind of monopol from Selecta so it will be hard)
-Carwashing (it is rare to find one on the marked and in CH are mainly owned by big names like Migros)
-Parking lot (this is the only one I see possible at the moment but it fall more under the real estate category probably)
-Camping (in CH is much more regulated so you cannot just use your kind to make sleep people in it like on the US)
Has someone a good idea of a boring business that may work good in Switzerland?
Keep in mind that this sector is highly connected with medical insurances. So if your product cost more per hour then what the insurances will refound the hospital or patient, you may find difficult to sell it.
I guess that’s a common theme for most of us, myself included.
I was working in IT outsourcing for 10+ years. Most of those years I was working in EU, before coming to Switzerland. My last positions were in management, and I could see firsthand how difficult it is to find people in the niche I’m working in. Also, we had external consultants to bridge the gap of hiring new employees, and I had to approve their timesheets / invoices every month.
So I knew two things: a) it’s really hard to find (halfway) skilled people and b) there is enough demand in the market for those jobs so that companies are willing to pay high hourly/daily rates. I had enough savings to survive 1.5 years without one project, so I gave it a shot. The last years have been very successful.
Still, there are caveats: I’m working way more than most people who are just employed, I have to search for new clients if projects end, I’m still heavily dependent on recruiters, I need to be a jack of all trades (accounting, marketing, sales, the actual technical work, administration).
I would have to check my numbers again, but 25-30k should be sufficient (if we are talking about GmbH/LLC, so 20k for the capital alone). Other than that, you might need a laptop, phone and internet.
Define less effort. I see your point and understand the idea (which is a good idea, just to clarify), but it’s not necessarily less effort. If you want to buy a business, you first need to do your due diligence. Which means educating yourself on discounted cash-flow, M&A (mergers and acquisitions), risks etc. In the end, you need to be able to make a decision about the asked price.
If the cashflow of the company is good and it has long-term contracts with customers, you can calculate the discounted cash-flow for the next years. Still, if it’s a small business, the owners asking price might be much higher than what you calculated (e.g. due to sentimental reasons). Unless the business owner is going to retire a business, why should someone sell a business which is going well? And even if the owner is going to retire: are you getting a fair price? Will customers stay when the owner sells the company?
A business which can be managed by someone else would need to have at least 5 or better 10 people, from my point of view. You would have to check how much a managing director earns, but I think we’re talking easily over 6k or 7k per month (why would someone risk being a manager if he can work for slightly less without responsibilities). It also heavily depends on the sector of course. In IT, I doubt you will get a managing director under 120k. If the business is on the lower end of the scale, you might get a cheaper managing director, but then also the margin in your business might be lower.
The million dollar question. I’m also interested 
Think about problems you are able to solve. Problems which are either bugging a lot of people in your profession, or problems which are expensive to solve (best is if both are true). Regarding acquiring a business: I think you first need to learn a lot of things about accounting, administration and financial analysis to be eligible to get money from a bank. I don’t say it’s impossible, but they might not even talk to you unless you come to them with a proper business plan, cash-flow analysis and proper risk/reward due diligence. You must be 100% convinced that the business you are about to acquire will be successful, and then convince the bank as well.
My wife knows someone who owns several solariums in Switzerland. Similar to laundromat, you don’t need any employee to run the facilities.
One facility would consist of many cabins, each cabin with a tanning bed.
Client enter the solarium, go to an automat to choose a cabin and select how long they want to use it, pay either with cash or credit card, and here you go.
Based on what my wife was saying, it seemed quite cash generative. I have no idea about the initial investment needed though.
Just did a very quick check. Professional solariums cost around 40k per piece. Even the home ones are only starting from 5k. see here That’s only one shop though, it might be a bit cheaper somewhere else.
Still, I think you need at least 3 solariums for starters. That’s 120k initial investment. Plus you need a place to rent (unless you are owning a house already). This place shouldn’t be in the middle of nowhere, so the rents are higher. I have no idea about rents for business, but I would assume we’re easily talking 3k per month in a bigger city with half-way location. You also need staff to clean the solariums.
Price per minute is 1 CHF (from what I found, not using solariums personally). I don’t know the usage rate, but let’s say 50% per hour for simplicity. That’s 30 CHF per hour / solarium. Let’s assume opening hours from 7am until 8pm = 13 hours. That’s 260 CHF per solarium per day = 780 CHF per day (if you are running 3 solariums). 780 CHF per day * 24 (Mon - Sat) = 18720 CHF per month.
120k / 18.72k = 6.4 months to get your initial investment back (not counting rent and employee costs)
I don’t know how long professional solariums can run (one year, three years, five years?) before they need to be replaced.
I guess you need roughly 1 year to earn profit. Of course, everything just calculated from someone who has no real insight about operating costs for running solariums
Yes, it would be more of a paid product (hardware and software). A medical device that has nothing to do with medical insurance, but thank you for your insights.
Do you have contacts in this area? I mean potential customers interested in buying from you?
A friend of mine is working in medtech, but for a large company as a regional sales representative.
From what I know from another friend of mine (he’s owning several businesses in Switzerland and abroad), health care is quite regulated. They prefer to stick with their known vendors most of the time. Think about it: would you rather buy a product from a startup which might not be around in 3 or 5 years, or from a company who’s been around for 10+ years already?
I’m not saying your paid product can’t work - the questions are just food for thought
Also, I don’t know any details about your idea. That’s something which would need to be checked in more detail. The questions I asked are the first ones which come to my mind (as a business owner myself, and from the potential investor perspective).
I have contacts and I’ve been working as a medical software engineer at different levels for 10 years already. The main idea comes from a doctor, and yes, there are potential customers. I know how regulated the field is, and about all the classifications that the device can be regarding the risk. I already evaluated this. Thanks for your insights 
That’s good. It means you’ve done the first part of your homework already
Sorry if I was too harsh in my first response. I might sound like one of those guys from the Dragons’ Den (even though I never watched any of those). Those were just the first thoughts that came to my mind.
No problem, I just took it like you were advising me and throwing some concern at me. So no issue at all 
I am actually planning to expand all my financials knowledge as much as possible. That’s also why, beside have read many books on financial topics on the last two years, I ended up on the mustachian website.
At the moment, while travelling, I am doing a certification in Project management on a well known website… once I am finish with it I will follow your tip and search another course about M&A on the same platform 
Have you learn all the skills you use to manage your business on your previous job, you learn by doing or you took some classes?
I have a master in computer sciences and a minor in economics. Both degrees don’t have much to do with what I’m doing right now. In computer sciences, I learnt a lot about CS theory, mathematics, hardware etc. Don’t need any of this in my job now, even though some of the concepts still help.
For economics, I attended courses in law and macro economics, so that also didn’t help me much.
I guess it helps that I was always a keen learner and generally interested in finances and numbers. Most of the stuff for the company was learning by doing. In the beginning, you will struggle, but depending on your grit and willpower you will figure it out. You win or you learn
Attending courses on education platforms is a great way to learn, from my point of view. We have so much knowledge available for free or for a small amount of money.
If you start your own company, most probably you will run into problems in different areas, because you don’t have the knowledge yet. After having started three different businesses, I’m now able to set up a fully working new company within 2-4 weeks (speaking about IT sector here, just to clarify).
Regarding M&A, I don’t have real life experience. From my point of view, you need to have experience to check the numbers of the business, to validate them while also having the conviction that the business you are about to acquire is going to perform well. Plus, your business case must be strong enough so that you can receive a loan from the bank. Which might be a problem if you don’t have a strong track record with them yet.
You can actually lease them
Yes, I saw that option too on the seller website. That’s why I said
You would then have to check how high the leasing costs are (per month/year, interest rate). The next steps would be to find a decent location (assumed rental costs might be too low) and validate how much salary you need to pay to hire an employee.
The idea is to get an overview about total monthly operating costs for the business. Once you roughly have those numbers, you know how much you need to earn per month. The calculation I did for usage rate was really simple, and I don’t know if you can calculate with 50% if you are new in the business.
You would need to consider costs for marketing as well (why would someone come to you instead of other providers etc.?)
Again: I’m not an expert in the solarium field. I think it can be a quite good boring business, if you know what you are doing and you have a steady customer base.
I think solarium is a really good idea for Switzerland and maybe the idea can be expanded with a small sauna “pay per use” where you are alone inside and not sharing it with a creepy person. However there would be also to check skin cancer risk and regulations. I am not sure how high the demand is as neither me or my girlfriend use solarium… what’s your experience?
Maybe buying an existing place where you can check the number before will be the solution.
The other day in Guatemala I saw some ladies at a Easter market with some home scales to weight people. They were asking for small money to know your weight. I found funny to imagine someone doing the same in Zurich HB 
competing with the one you put the coins
Didn’t the solarium trend die about 20 years ago…? I don’t know anyone who uses a solarium.