Most people are terrible at purchasing businesses. This article will discuss a simple framework that works.
Here is a tried-and-true framework called DOWP for answering the question "What sort of business should I purchase for profits?"
The acronym DOWP is:
- Dull
- Old
- Weak
- Plain
It's a quick and easy way to evaluate your initial deals and construct on them. Find the companies with the following:
- Least danger
- Economic viability
- An affordable cost
- Possibility of expansion
- Efficient execution
Dull
Where you currently are, half, if not most businesses are suitable.
The facility is functional, but:
- There are no reviews
- It's a website from the early 2000's
- They have zero to minimal use of social media
- They might still be using fax machines
When you purchase, there is a ton of space for simple alteration. Moreover, you don't factor that into the purchase price.
Old
Companies with a minimum 5-year history. Try to choose a 25-year-old restaurant over a startup run by younger generations if you want profitability. According to the Lindy Effect, something that has been around for a while is likely to stay around. Older companies can contain real treasures.
Weak
Purchase a company with little competition and think of yourself as the following
- Timely
- Including automatic billing
- A person who follows up, provides aftercare, or solicits feedback
These are 3 quick fixes you can make to outperform the competition.
Plain
Have a plain business plan and do plain implementations. You're mostly in good place if you can pretty clearly interpret your first several offers to a young child.
Avoid being drawn away by bright lights when searching for your first purchase.
Remember: History + Uninteresting + New Operator = Cashflow
Keep doing what is effective, just simply improve it.