Looking into buying a established business

[mns]

Hi Everybody,
I use to own a Sub-Postoffice and retail shop a few years ago, until Government
closure policy took place and I had to merge my Office with another.
I have started to look into Domiciliary Care Business, Day Nursery and Care Home.
These sectors I do believe are flourishing but Government policy are effecting these business.
What I wanted to know which sector is doing well under these circumstances and will continue to do well
as there is a need for these services. What I have found out that Domiciliary Care Business depends on its care workers to be reliable and also that there is a high turn over of care workers.
The Day Nursery location and the demand is there then the bottom line net profit will be good.
There are Care homes for different needs i.e Alzheimer and Dementia. I have been told that the local council policy plays a part in the Care Homes income and retaining staff is a issue.
I am asking for experienced business people in these sectors to shed some light and which business would they recommend to buy, that has a healthy net profit in its sector.
When I had my Post Office business I was going to buy another one as I was comfortable running the first one. But then the closure of many of the Post office started so that got shelved. I really appreciate the help and guidance in the matter. Thanks
.

 

[Mr D]

Having worked with charities for a few years I am aware that for better part of a decade it can be charities subsidising councils with regard to care and nursing homes. Where costs increase by several percent, council increases its payment per resident by say 1% and not all the beds filled the organisation can be making a loss for some time.

 

[Chris Ashdown]

Care is something you really need to be cautious about as high overheads and high turnover of staff is a nightmare

Spar shops always seem to do well whilst other village shops seem to fail due to limited footfall unless village is about 2-3000 people

Private hotel (small) or boarding houses away from seaside can do well

 

[mns]

Thanks for your reply Mr D and Chris Ashdown you both have given informative points to look at.
Which I appreciate and it is why I am asking on the Ukbusiness forum for people with first hand experience of owning Domiciliary Care Business, Day Nursery and Care Home.
I really appreciate everyone`s reply and advice as this is how we learn and make informative decisions. Thanks

 

[Socio South West]

All the types of business you mention are heavily regulated and have lots of red tape attached.

You are identifying many of the plusses and minuses with each type of business quite easily - it sounds like you need to brainstorm and list the pros and cons of each type of business on a sheet of paper to help you channel your thinking.

All these businesses have a ready demand for their services, and for the foreseeable future a steady stream of potential new clients. By and large profits will depend on your management skill, and a good purchase if you see buying an existing business as the way forward.

There are regular business failures in the Care Home and Day Nursery sectors - not so many in the Domiciliary Care sector, probably as the capital required is so much less than the other two types you mention.

Interesting discussion...

 

[mns]

Thanks for your reply Socio South West and what you mentioned is the conclusion I am coming to
that the Domiciliary Care Sector has a higher demand as the local council and Government don't want
to help pay towards Elderly Care Home. Just like the Post Office sector was systematically reduced and the High Street Banks as well. I am seeing the same with our Police station, Hospital and Libraries. Just makes me think that Bricks and Mortar business will suffer in the future and only the few will survive. But appreciate everyone`s reply and advice. Many Thanks

 

[Chris Ashdown]

As a broad stroke, Leisure and service industry are likely to be least painful area effected also the quality companies

 

[mns]

Hi Chris, You mentioned Leisure and Service industry do you have any examples in mind that are
doing well and are worth investing in. Like for instance McDonalds, Kfc , Pizza Hut dominate the
fast food sector and you would not go wrong in purchasing one. But it is not my interest in that sector.
Just as a example and Thanks again for your reply and advice.
I look forward to the advice and guidance from Ukbusiness forum members.
Thanks

 

[Chris Ashdown]

It rather depends on your skills and what interests you,

 

[mns]

The skills that I have after owning and managing a Post Office with counter clerks was getting along with the general public which I enjoyed and the office work which was with various departments and organizations. Which we provided the counter services from online banking to dwp, passport, royalmail, parcel force and licenses issued on a daily basis. Why I got into the Post Office was nature of the business and every high road has one along with a high street bank to call it high street or main high road for that area.
Because it was a franchise I was going to buy another one as I understood the Post Office admin work inside out. The business was not gaining profit and the overheads was increasing every year that is what made the business not viable to continue. The Government started to close offices or merge them to make them viable again.
So I am looking for a Business that is a growing sector with the bottom line net profit able to grow more than the overheads or unforeseen circumstances destroying the value of the business.
The Post Office has now lost the value it once had and quite a few Post Masters and Post Mistress are stuck with a business that is on the borderline of closure with no hope of selling the business as a going concern basically negative equity.
The sectors I mentioned before seem attractive to me as a business I would like to manage and own.
I see Chris Ashdown you are a EX-INTERNET Business owner or you are still in that sector . I have come across Internet Business being sold on ukbusiness forsale it just how do value the business as a viable proposition and make a comparison to another internet business.
Thanks for your reply and valuable advice most appreciated.

 

[Mr D]

Unforseen circumstances can destroy any business, due to being unforeseen you cannot easily plan for them.
Known issues in many businesses include rising business rates, rising wages (4.16% increase is a lot to swallow when you add on employer NI on top), competition from bigger competitors and so on.
A weather problem like we have had past few days is a once in several years impact in some areas, more regular in others. Can be forseen that one can impact your business, just harder to predict when.

Have you thought of doing a market stall? Lots of customer interaction (on the busy stalls anyway).

 

[mns]

Hi Mr D, Thanks for your response I was really looking for a business that has growth or can multiply. Domiciliary Care Business, Day Nursery and Care Home you can buy and run then do the same again. I have been asking about these business as they appeal to me plus provide a care service to the wider community. My main concern is about the pros and cons of each business sector and which gives the best net profit so that I could reinvest and eventually expand the business or buy another one.
I was hoping that a owner of one these businesses would elaborate on the net profit and issues to look out for on this forum. I wanted to find out the facts and figures on these business and how would I go about doing it. I.E would it be a business broker or should I randomly phone a business owner of these business that I am interested in to get some inside knowledge.
I appreciate the response that I am getting back from fellow Ukbusinessforums as this is a learning curve. Thanks

 

[Mr D]

They are also sectors with risks, including making a loss no matter what you do.
Look around for news reports from the sector as to the perceived issues.

May find an owner of one on the forums, there's more business owners on during the week than the weekend.

 

[mns]

Hopefully during the weekday there would be a business owner of the sectors I am interested in responding and passing on the knowledge for me to make a informed decision.
Thanks Mr D for your reply.

 

[Chris Ashdown]

I used to supply to many nursing homes with Workwear, but many new enquiries would be asking straight away for credit terms which we never gave until established. Many changed hands whilst using us, In the end we stopped advertising to nursing homes

The care agencies we supplied got hit by the pay between jobs for travel etc and a few went under but some did well but not a big money maker but steady income. always advertising for staff so that may be a problem

Good cleaning companies serving industry kept buying uniforms

Agency nurses also brought a lot of uniforms

Internet is great for niche businesses or companies who make goods to sell, others like Workwear have a big fight due to competition and has become very price competitive

 

[mns]

Thanks Chris for the insight into the dealings you had with the businesses that I am interested in.
Your breakdown of the industry which were doing well and was able to pay for your services gives a
valuable reflection.
Like previous post mentioned during the week there would be members who run those business.
Reply to the questions I raised of concern and to do due diligence for making a informed decision.
I appreciate business owners to please do reply and give there valuable experience of the care industry.
Thanks

 

[Lee-finance]

Hi mns, I deal with around 70 care homes and every one of them are doing really well. growing year on year making substantial profits and good reviews. As you can imagine, dealing with service users in this capacity, on going training will always be required and staff turnover will be high.

Although my care clients are doing well, other care homes aren't so do a lot of research in to the business, check the last 5 years accounts and future projections to see if it has been going in the right direction rather than one great year.

last of all, check the CQC website to assess the quality of care the home provides, the last thing you need is to buy a business with decent profits to then find the care has been inadequate, no one likes bad press.

hope that helps

Good luck

 

[Anna12]

I cannot help with all of these but I can tell you a few things about care homes. As far as they are concerned, staffing is a challenge, esp. now with Brexit. If you are thinking of a nursing home you will also need to rely on nurses and this can be a significant problem due to severe shortages. Relying on residents who do not pay privately is not the best option as councils do not pay well enough. There has to be a healthy balance between residents who pay privately and funded ones. This is the second major challenge. Staff retention could be the third with the rising minimum wage requirements. Small operators seem to struggle the most in terms of financial viability. If we made the distinction of care homes for seniors and care homes for learning disabilities, the first are usually bigger (20+ beds) and the latter significantly smaller (4-5 beds in a normal house). Learning difficulties operators seem to struggle at the moment (search for the sleep in crisis). Regulation is heavy but I am sure you are aware of it.