Editor’s note: This article was first published in December 2010. Its references to “this morning”, “last month” and “three weeks ago”, and its remark about the fall in Spanish construction, refer to that moment.
This very morning I met two entrepreneurs who run a very profitable business that’s also rather surprising. When I asked them what they did, their answer stopped me in my tracks: “business speculators“.
Put like that, I’d say it doesn’t sound great, but from the numbers I saw and the way they explained it, I came to realise I was sitting in front of two “artists” in the art of doing business and, above all, in creating value in businesses.
Their business is, quite literally, businesses: undervalued businesses and companies. They don’t set a target company size or a minimum sales figure as a yardstick. They look at a business not for what it is or what return it makes now, but for what it will be once they take it over and what return it will bring them before they sell it on to another company at a profit.
In 2009 they bought a total of 16 businesses. To date they have sold 11 of them and kept the other five, which also happen to be suppliers to the businesses they sold, so the deal works out perfectly from every angle.
They bought a small advertising brokerage that had revenue of about €12,000 a year, and in less than eight months they got it billing around €35,000 a month. They say all they did was expand its services and invest in advertising to make the business known. It was so successful that last month they sold the company, client portfolio included, to an international firm. They say they made a profit of €115,000 on the whole operation in eight months.
They also bought a PVC window workshop that had gone bankrupt through its owners’ mismanagement, since, as we all know, construction has slumped in Spain. They managed to cut out production by outsourcing it and refocused the business on foreign markets, where they found they could be competitive. Three weeks ago they negotiated its sale to a Dutch multinational, and they expect to make about €185,000 on the deal.
Over the years they have bought bars, restaurants, nightclubs, laundromats and all kinds of very different businesses, but they all had one thing in common: their owners weren’t running them well. In just a few months of doing things properly, they turned those “mules” into racehorses.
They clearly have an innate gift for creating value in a business, a feel for the market, negotiating skills and so on. In short, rather than speculators, they’re entrepreneurs through and through, even if they later get rid of most of the businesses.
I’m simply sharing this as an example so that anyone can see there are always ways to turn a business around. It’s just a matter of new ideas, innovation and, above all, vision.
Further reading
- Starting a business or buying one?
- How to run a small business in times of crisis
- Five ways to grow your business
- How to improve your business’s sales in three steps
Featured image: Sanasante0, CC BY-SA 4.0, via Wikimedia Commons.
