Is property investment a good reason for selling your business?
Selling your business when you’re ready to retire is something you might expect an entrepreneur to do. But for some business owners, boredom or a desire for change means they decide to sell.
According to an article by Cranfield University’s David Molian, a bored entrepreneur ‘is a dangerous beast’. He says, “They are dangerous because they are capable of destroying much of the value he or she has created.
“It’s a common error for entrepreneurs to confuse boredom with the business with boredom with their role in the business. Most of us get bored if we do the same job for too long, and the fact that you’re the business founder doesn’t change this.”
One popular reason why entrepreneurs ask us to sell a business is that they have become bored and are planning to invest in property. There are many success stories when it comes to property investment. But there are probably as many, if not more, tales of woe from those who thought it would be easy.
Property investment can provide a valuable and stable income stream, but it’s important to be aware of all the costs associated with property investment and ensure you have the cash to make the investment.
Do you really want to invest in property?
Property investor and author of Property for the Next Generation, Vicki Wusche, says it’s not enough to want to make money from property.
In an article for a business magazine, she explains that there’s a lot more to property buying and making a quick return on investment. She says there are many reasons why buying property as a business proposition is very different to purchasing a home. This is echoed by landlord advice website Property Hawk, which has says there are as many pitfalls when investing in property.
Of course, you may be considering commercial property as an investment. This is a decision that shouldn’t be taken lightly at the moment! Since the lockdowns of 2020, commercial property values have taken a hit. Working from home plus downsizing means many commercial units are not as viable as they once were.
According to the Financial Times, interest rate rises have added to the problem and as a result, lenders have been spooked. This all means that commercial property investment is not for the faint hearted.
If you are a successful entrepreneur that wants to sell a business, then you clearly have what it takes to grow a company. That might mean you are in the perfect position to make it as a successful property investor.
And while house prices have generally risen since 1975, this chart shows the troughs as well as the peaks. Investing at the wrong time could hit you in the pocket.
Therefore, it’s essential that you do your research, speak to experts and never put all your eggs in one basket. It’s not unusual or wrong to use the profits from selling your business as a deposit for a property investment, but make sure your approach is well thought through.
Ultimately, it’s all down to what your plans for the future are. At Hornblower Business Brokers, we like to listen to those plans. And we may also be able to suggest alternative ways of achieving your dreams, and escaping boredom, in a less volatile market.
Article updated December 2022.