Is it a good idea to rent out your profitable business?
Let me tell you about a strange business proposition that I am sure will interest you. Picture this: Imagine you own a money making business, and you go ahead and rent it to someone else. Sounds crazy, isn't it? Well, read on because there is a story that I am going to share that will possibly make you think twice.
Allow me to bring you back to 2005, when I decided to start my very first business and that is a phone call center back in my village. Only a few people had GSM phones back then because they were way too costly. So my little phone call center quickly became a sight for the villagers to rush to, especially during the morning and evening rush hour when everyone had to make a call.
After running it successfully for two years, a dilemma landed in my lap. I had to go back to school for a two-year degree program. At first, the sale of the business was considered; then another thought occurred - why not rent it?
It turned out to be a great solution: I rented the business during school and took it back during the holidays to run it myself. The nice thing about this setup was that I stayed the owner but still got my money at a consistent rate while I was going to school. Plus, I could always go back to my business after graduation.
Fast forward to the present and this memory came alive during one of my recent conversations with my cousin. Owns a successful laundry in a prime location, fully equipped with modern machines and a loyal customer base. During our conversation I casually asked him why his shop was closed last week and his answer shocked me, he was looking for someone to rent it.
The reason is that he won't always be there and his wife is busy nursing their new baby. And now the point is that the business brings in over $150 a month in profit and he is willing to rent it out for $15 a week. They normally pull in about $50 a week so whoever rents it from them will make a killing plus save money by not having to invest in equipment.
Think about it: the person who rents it gets an established business with all the equipment, customer base and potential for $35 a week without having to invest much. It's like picking money for free.
But here's the problem: while the security of regular rental income can be appreciated without the day-to-day worries of business operations, isn't my cousin leaving too much money on the table? The business is already profitable, has all the necessary equipment and has an established customer base.
In my experience with the call center, renting a business can be quite decent as a temporary solution when one needs to leave but wants to retain ownership. However, in my cousin's case, I wonder if there might be better alternatives - like hiring a manager or training someone to run it while retaining more control over the profits.
What is your opinion about such business practices? Would you, under any circumstances, decide to rent out your business that has seen success? Sometimes, the road less traveled is the right direction, but it is important to weigh all options before reaching that conclusion.
Remember that what may be suitable for one person may be the same for another. All this leads to an understanding of a specific situation, goals and the question of what a person values the most' quick satisfaction or future returns.
Have you ever been in such a position? I would appreciate your comments and stories related to that rather uncommon business style.
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Si, efectivamente es bastante inusual por los riesgos que puede representar, por ejemplo, que a los equipos no le den buen uso o el trato con los clientes leales no sea el idóneo o al que están acostumbrados, pero también puede ocurrir que el negocio agarre un mayor impulso y se vuelva más rentable. En todo caso me parece que lo del alquiler es una buena alternativa.