Hi,
the theme for today's #februaryinleo, the initiative for increasing the interaction and the quality of posts, is about opening a store, restaurant or business, which falls under the #noveltytuesday.
Well, a lot of people if they want to start a business, they think about a restaurant, café, bar, or a store, mostly a pop-up store. Sadly, these are the type of businesses, that have the highest failure rate. The market is quite tough on the restaurants, as there are some things that need to be taken in account, and the biggest is the cashflow and mostly the low operational margin. Don't get me wrong, if you manage to scale it, to have a couple of bars or stores, under the same brand, and a lot of cash to catch the bad months, then it can be a business with a higher profit. It needs only the scale.
Together with some friends, during our university years, we owned a tan studio, which is like a restaurant, a lot of customers, low margin, high maintenance. We were glad when we sold it, or better said trade it, as we have traded it for a couple of hectares of agricultural land. Which was a smart thing to do, as the business went bankrupt in 2 years, and the land had a 300% increase in value, bringing us a nice income every year.
Now, the last business owned, which was sold at the end of last year, was a small manufacturing hall. We did manufacturer for a lot of customers, some world-famous companies, that needed a fast customer approach. For a factory that has opened near Berlin, we manufactured 60% of the frames used in one of the assembly lines. This kept us busy for 4 months, with 3 shifts and the machines working 24 hours a day. We had only the regular maintenance on Sunday, in the night shift. And we had beside that, for the past 2 years a plane manufacturer, where we did a part for the jet engine. With the last one, all expenses paid, workers, material, rent, everything. It was an easy customer, as he knew that the parts we shipped are according to his standards. I've sold it after 4 years, during the time, we managed to clean it, make it profitable and scale it to a certain stage. The next step would have required a lot of money, which I don't have. So, the venture was sold. I like old types of business, as I understand them. Understanding a business is the first step to be profitable.
Now, I'm looking into something else, not really decided what, maybe the side hustle with real estate, as I try to build a portfolio that can pay for my retirement. Also, AI is very tempting, but don't have a business case for myself yet. What I look into, are high margins, of at least 15%, else is not worth, as money could be sent into an index fund. It also needs to be scalable and have some tougher entry point, to keep the competition low. If you know something, please let me know.
Do you own or operate a business?
