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As a accountable investor, you most likely do not put all the pieces in a single funding automobile however as a substitute have a portfolio that balances threat and reward by drawing on a wide range of sources. That is the strategy it is best to take when selecting firms so as to add to your online business portfolio. However how do you select? One of many core missions at my firm, United Franchise Group (UFG), is buying companies to spend money on, and we have discovered one of the best course is to name on strengths that you should utilize in a brand new enterprise.
In different phrases, purchase what .
Correctly managed, success breeds success. As soon as you’ve got led one firm to profitability and achieved different measures of excellent well being, you will wish to repeat the win. You will note new alternatives that may add extra worth to your organization. Using your strengths helps make it simpler to reach a second or third enterprise.
Diversify in class
Plan to create a various portfolio, however do not stray from what has introduced you right here. Diversify inside the class you are succeeding in. For instance, a profitable restaurateur would possibly wish to take a look at different eating places however keep away from supermarkets. They’re each within the food sector however require a very completely different set of abilities.
On the identical time, do not buy one other firm that does precisely what you do. When pleasure fades for that area of interest, your losses will run twice as deep. Should you personal a reduction grocery store, for example, think about a gourmand market.
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Go along with your intestine — for now
Funding selections at all times require goal, rational pondering, nevertheless it all begins with what your intestine is telling you. While you go to different businesses as a buyer, what impresses you? Let your intestine drive this a part of the method.
A enterprise dealer also can make it easier to consider your choices. Search for profitable niches in your trade. For instance, at UFG, restaurant buyers might think about our Greek meals and charcuterie franchise manufacturers, which have caught the eye of meals lovers in search of more healthy decisions or who wish to add participating methods to snack at celebrations. Real estate and enterprise consulting companies would possibly think about investing in considered one of our coworking franchises, which continues to draw professionals in search of flexibility of their workspaces.
Now go along with your mind
As soon as you’ve got picked the kind of enterprise, it is time to let your mind take over in your intestine. Search knowledgeable assist in evaluating the varied points of the corporate you are contemplating, corresponding to monetary well being, buyer demand and operational efficiency. In case you have a company group, name on workers from the completely different areas you could consider, together with gross sales, operations, administration and accounting. Get to know the founders of the enterprise you are shopping for and resolve if anybody will probably be staying after you purchase it. Ask a number of questions, and when you do not feel proper concerning the solutions or, worse, catch a deceptive assertion, do not be afraid to bow out.
Loads of this due diligence could be accomplished for you when you spend money on a franchise model, which affords dependable methods and processes, model recognition and, when you select the correct one, advertising and marketing and coaching help.
The synergy of member manufacturers is a crucial think about franchising, nevertheless it must also be a prime consideration when you select to spend money on independent manufacturers. Contemplate whether or not your companies can share sources. Would you like them to seek the advice of with one another or stay utterly separate?
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Classes realized
In my 40 years of acquiring companies for my firm to spend money on, here is a few of what I’ve realized about shopping for and promoting manufacturers in a portfolio:
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Personal fairness has taken a dominant place in franchising. Whereas it may be excellent for some manufacturers, it may be horrible for others. Go slowly right here, particularly in case you are giving up a majority stake. Even a minority place could cause challenges. Discuss to others who’ve accomplished it earlier than promoting out.
It is virtually inevitable to have some regrets when making enterprise selections — mistakes are a part of the journey. UFG has had some hurdles and challenges in shopping for or promoting manufacturers through the years, however we have at all times labored them out. No matter occurs, I at all times deal with the long run and transfer ahead — and it is best to, too.
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