Being direct… Who doesn’t want a high cashflow business that is easy to operate? I’ve got both hands up.
I’m going to share with you some business models I’ve ran across that are easy to operate’. This is going to come from the perspective of; acquiring a business. I prefer to acquire established businesses rather than start them.
About that ‘Easy To Operate’
Of course I must state the obvious, ‘easy to operate’ is subjective. An easy to operate business for myself might be an Ecommerce digital business where I don’t have to entertain clients all day, but if you’re a social butterfly that might be a mastermind group.
That said, I’m trying to stick with businesses that are easy to operate and not difficult to operate. For example our social butterfly might find an event planning business may be a suitable business model for that operator, but with all the moving pieces, and reliance on third parties, I would not say an event planning business is easy to operate.
Another example of a business that can produce high cash flow, but is not easy to operate is a power washing business. With a power washing business your employee are out of supervision, in your vehicles, you’ve got homeowners complaining, scheduling conundrums, equipment breaking, OSHA compliance, yea its a night mare.
There is ultimately a trade off between capital required to operate the businesses and owner involvement required. I’ve got businesses across the board.
Business Models I’ve Seen That Fit The ‘High Cash Flow’ and ‘Easy To Operate”
Let’s jump into it.
These businesses provide in home healthcare or assistance employees directly to customers. Sometimes the businesses provide employees that are more or less adult babysitters on up to registered nurses. Home healthcare businesses generally bill at a multiple of 1.5 – 2x the cost of their employee so that works out to a 33-50% margin, without really any other costs. What’s REALLY cool here is the businesses generally take a prepayment from the customer, so there is a negative cashflow cycle. No such thing as a free lunch though, these businesses do require a good bit of time in recruiting employees and managing issues such as availability of employees and fostering a relationship between the customer and employee.
You ever run across an industry mastermind group that charges $500-1000 per month and hosts weekly calls and occasionally events with renowned experts — remotely of course?
You’re probably already thinking about how much money they make.
What I really like about this business model is that you don’t need to create a course or bring much expertise to the table. Expressed in other words, the product is not you and your knowledge, but rather the community you bring together.
These businesses might seem like a unicorn but while they’re uncommon, I wouldn’t say they’re rare. I run across a couple for sale every year.
The pandemic of 2020 really altered the book keeping business model for the better, before that I’m not sure I’d classify them as high cash flow. Prior to 2020 most bookkeeping businesses kept a brick and mortar office that was expected for clients to take them seriously. This was often the largest overhead item for the business and created the need for extra staff. As we know with COVID, being a 100% cloud business became normalized. Not only were bookkeeping services able to cut the office expense, but they were also able to capitalize on lower cost labor overseas. Now it’s not uncommon to see established book keeping businesses with 30% margins listed for sale.
What’s cool about this business model: the revenue is recurring and very sticky (clients last a long time), and the service lends itself to auxiliary services such as payroll, HR, insurance, tax planning etc.
Rental Real Estate
The concept is simple; buy existing real estate and rent it out. You’ll get returns in the form of rental income and real estate appreciation. A little bit of owner involvement can juice up the returns. Sinking in the work for some value-add activities can allow you to command high rental rates. Managing the property as a short term rental will usually garner higher rental income, but may take some mental energy.
What’s cool about this business model: depreciation deduction on your taxes usually offsets most of your income.
CarWash (self serve)
Self serve carwashes in the right location and optimally designed usually produce cash flow above 45% of revenue with very little owner involvement. High volume car washes, the ones that fit that ‘high criteria’ will commonly require a nightly maintenance a few times a week, so the people I know that operate car washes usually own two of them in an area and have a 3 man crew that handles tasks at them alternating every other night.