Investment ideas for $100k company profit

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dissident

New member
Let's say an online business generated the last year about $100k in net profit in the company (corporate tax free).

What would you do with that money as investment vehicle without taking it out of the company?

Assume the money and company is based on EU, but other regions may apply as well.
 
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Tax Cow

Moo Moo! I contribute 60% of my milk to the state.
Entrepreneur
Scale your business so that it makes 150K next year. Buy inventory of popular products and improve delivery times, or just try out some adds to bait in more customers. If you have a persistent problem with the order backlog, consider hiring new people, but only if that's your bottleneck. Once you get to 500K net profit, hire a CEO to make yourself transparent. Continue working, but only if you feel like it ;)

Once the new CEO is proven capable, you can sell the 500K net profit business for at least 5M. Alternatively, keep the business and relocate to tax haven to live off of low-taxed/untaxed dividends.
 

Reinassance

New member
Scale your business so that it makes 150K next year. Continue working, but only if you feel like it ;)

Once the new CEO is proven capable, you can sell the 500K net profit business for at least 5M. Alternatively, keep the business and relocate to tax haven to live off of low-taxed/untaxed dividends.

Great Advice!
That's exactly my plan for the next few years. Right, now i'm stuck in scaling with my e-commerce, I'm looking for new revenue streams. How can you manage more successful business? (for example two 1m€ profit companies)
Also do you think it's possible to find acquirers in the
informal low tax e-commerce world for 2-5-10M € ranges?
 

Tax Cow

Moo Moo! I contribute 60% of my milk to the state.
Entrepreneur
Great Advice!
That's exactly my plan for the next few years. Right, now i'm stuck in scaling with my e-commerce, I'm looking for new revenue streams. How can you manage more successful business? (for example two 1m€ profit companies)
Also do you think it's possible to find acquirers in the
informal low tax e-commerce world for 2-5-10M € ranges?

I have one real business. The rest (40+ right now) are either wholly or partially just laundering ops.

You can sell the online business, but the key factor is that you the founder/seller are proven to be redundant. Where the buyers turn the other way is when they find out that the seller is too involved in management. Nobody can justify buying if the revenue drops in an unknown amount the moment the seller stops working. Also, statements like "low management overhead" won't help, because the buyer does not want to bug you about on-going issues, or learn how to manage what you left him. They want to acquire a 99.9% hands-free business, a passive revenue stream. If you can demonstrate that it is, you'll get offers.
 

hernanday

Entrepreneur
^As someone who has bought and sold businesses the man above gives excellent advice. The easiest to sell business is one where there is a manager in place who can run everything, it broadens who you can sell to. If I told you, here is a business in a space you know nothing about it makes a good ROI for you, but you need to be an expert in that space. You'd be a fool to buy it. But if I said, the same thing and there was a manager in place and if he leaves, I'll train a new one for you and run everything and charge you no extra for it. That is a pretty good deal.
 

Reinassance

New member
I have one real business. The rest (40+ right now) are either wholly or partially just laundering ops.
So you funnel your profits to these different endeavours.
Impressive, how long did it took?


i understand the point, thank you.
Sounds like that in order to sell your business you need to look more like a "traditional" business not Wyoming LLC ,but UK LTDs with proper structure, management team, no offshore shareholders and Pwc audited accounts.
I would have liked to emerge as a normal business, especially in the past, but i'm a bit against the system by nature so i'm less and less interested in doing so.
I'm making 10-15% annual profit margins (i sell products) because i'm keeping lean and simple otherwise being personally undercapitalized i would not be able to operate.
A CEO is a big expense, i'm not complaining, obviously i want to expand and possibly sell like every entrepreneur and i know that there's no magic trick but that kind of thing requires capital. I'm trying to balance growth with not spending too much. Scaling from 1M in sales to 5-10M i think is the hardest especially when you can't raise additional capital.

Let's say you have a management in place and the business is stable and runs smoothly without owner involvement.
Do you think a 0.5-1M revenue and 10-15% ebitda business generates more interests than a 5-10M with same margins from potential buyers or viceversa? These kind of deals are done with ebitda/sales multiples?
 

hernanday

Entrepreneur
So you funnel your profits to these different endeavours.
Impressive, how long did it took?


i understand the point, thank you.
Sounds like that in order to sell your business you need to look more like a "traditional" business not Wyoming LLC ,but UK LTDs with proper structure, management team, no offshore shareholders and Pwc audited accounts.
I would have liked to emerge as a normal business, especially in the past, but i'm a bit against the system by nature so i'm less and less interested in doing so.
I'm making 10-15% annual profit margins (i sell products) because i'm keeping lean and simple otherwise being personally undercapitalized i would not be able to operate.
A CEO is a big expense, i'm not complaining, obviously i want to expand and possibly sell like every entrepreneur and i know that there's no magic trick but that kind of thing requires capital. I'm trying to balance growth with not spending too much. Scaling from 1M in sales to 5-10M i think is the hardest especially when you can't raise additional capital.

Let's say you have a management in place and the business is stable and runs smoothly without owner involvement.
Do you think a 0.5-1M revenue and 10-15% ebitda business generates more interests than a 5-10M with same margins from potential buyers or viceversa? These kind of deals are done with ebitda/sales multiples?
Internet business, so typically you are 1-5 time your sales. Nothing really proprietary about selling goodies on the web, you don't have some special patent or product I assume, you are just a reseller? You gonna get a multiple of 3-4 times your profit. Minus out any liabilities from that number. When you get big enough, focus on improving your margin. Worse case scenario you can sell your business to the CEO.
 
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