Now that the real estate market has tanked, it’s much more difficult to flip a house. There are, however, a select group of “flippers” that are making money despite the real estate slump. What’s their secret? They aren’t flipping houses, they are flipping businesses.
These Bizz Flippers (named coined by the company BizzFlip) are taking advantage of the relatively untapped marketplace of buying and selling existing businesses. How are they making money? They are using the same basic principals that apply to flipping a house. They buy a business, make improvements and renovations, and then sell the business for a profit.
There are two significant differences here between flipping a house and flipping a business. The first is that it takes more work and more business experience to run and then flip a business. That seems obvious. The second, and what makes it so appealing to people, is that during the interim of the flip there is an opportunity to make money from the business itself. In contrast, during the interim of a house flip you run the risk of falling into the red. Bizz Flippers are effectively decreasing the risk involved with their investment.
It’s hard to say, but it certainly seems fathomable that sometime in the future we will see a spike in this. Who knows, next time you turn on the television you might see that Flip That Bizz has replaced Flip That House.
Photo via Housing Doom.
Stacy O'Quinn on December 5th, 2007 at 11:42 pm
That is a very interesting concept. Can you imagine the opportunity? Of course it probably would help if you had knowledge of the industry that business is in. I would guess that finding the business to flip would be the hardest part.
Brings up another point. What if you flipped an MLM position within a company. You bought a position built the momentum if you have that experiance and then “flip it”. Just an interesting thought thinking outside of the box!
Stacy O’Quinn
Tyler Carbone on December 6th, 2007 at 7:04 am
This is essentially what private equity firms do.
Josh on December 6th, 2007 at 11:10 am
Have you ever heard of LBO? This has been going on for years and made people extremely wealthy. Think Ivan Boesky.
Richard on January 26th, 2008 at 5:56 pm
Isn’t this exact what the venture capitalists have been doing for decades? Buy a business, get it profitable and then sell it for a profit?
I’m glad the little guy can get in on this action now~