Turnkey Business Opportunities: How and Where to Buy One
Updated on November 24, 2022
Entering the world of online business is a lot like finding a new house to live in. You can either build one from scratch or buy an existing structure.
When searching for an existing building, you could get your hands dirty renovating a fixer-upper, or simply move into a pre-prepared, functional home instead.
Purchasing an online business is much the same. Some entrepreneurs thrive on the challenge of breathing life into a fledgling or declining business, others just want to get down to running and scaling the finished product.
If you fall into the second group of entrepreneurs, then a turnkey business is the solution for you.
Let’s take a closer look at the anatomy of turnkey business, the advantages of becoming a turnkey business owner, and how you can go about finding a turnkey online business for sale.
What Is a Turnkey Business?
A turnkey business is a business that is fully functional and ready to open its doors from the moment it’s purchased by the new owner. In other words, it already has a proven, successful business model in place, and merely requires someone to take the reigns and steer the business.
The term “turnkey” refers to the minimal amount of work and effort needed to operate the business, with the owner simply needing to turn the key to unlock the doors and begin operations.
The beauty of a turnkey business is that the startup phase is already complete, and the teething problems have been endured and solved by someone else. To be considered turnkey, a business doesn’t necessarily have to be profitable, but it can’t be heavily impacted by problems like broken processes or missing infrastructure.
Turnkey business opportunities exist in a variety of different business models, such as commercial real estate, brick-and-mortar businesses like laundromats or car washes, as well as online business opportunities like content sites, SaaS solutions, or e-commerce businesses.
In this article, I’ll hone in on online business opportunities. The benefit of turnkey online businesses in comparison to their physical brick-and-mortar counterparts is that many online businesses models are relatively passive in terms of workload. They also allow entrepreneurs to work from home, or anywhere in the world for that matter.
Why Do Buyers Want a Turnkey Business Opportunity?
Many people leave the corporate 9-5 grind seeking freedom over their time, to become their own boss, and have control over their earning potential. But not everyone enjoys the challenge of building an online business from scratch.
What makes turnkey businesses such an attractive prospect, is the idea of skipping the set-up phase of the business. In many cases, this greatly reduces the number of working hours needed to maintain operational efficiency, allowing entrepreneurs to essentially purchase a cash-flowing asset, not a full-time job.
With the building blocks already in place, turnkey business owners can start earning profits from day one, helping them to recoup their initial investment (the cost of the business) much faster.
Turnkey businesses suit people who don’t have a big appetite for risk, and who are looking for a reliable way to replace or grow their income. The reduced workload also makes turnkey business an ideal option for entrepreneurs looking to grow their business portfolio without stretching themselves too thin.
What’s Included in a Turnkey Business?
Before purchasing a turnkey business, the interested buyer should be provided with the business’s financial statements and earning history to prove that the systems and processes in place have been tried and tested and are not just based on theory.
A genuine turnkey business should equip the buyer with everything they need to run their business.
Content sites tend to be the most streamlined of the online business models, often with the fewest number of assets to be transferred. A turnkey content site business should include things like:
- Access to the domain backend, as well as all of the site content and files
- Standard operating procedures (SOPs) that outline the content creation and publication processes
- Control over social media, email lists, and other online accounts
- Marketing materials
- Contracts for any employees or freelancers employed by the business
Ecommerce businesses like Amazon FBA or Shopify and Walmart stores have more moving parts to be considered. A turnkey eCommerce business for sale should include:
- Amazon Seller Central, Walmart, or Shopify accounts
- 3PL and supplier contracts (if applicable) as well as contact details
- Control over social media, email lists, and other online accounts
- Marketing materials and PPC campaign data
- Contracts for any employees or freelancers employed by the business
- SOPs outlining the supply chain, logistics, and inventory management processes.
- Trademarks (if applicable)
Other online business models like SaaS, Amazon KDP, as well as digital product and subscription businesses, also require a combination of the above assets.
Lastly, an important asset that is often overlooked is ongoing support from the seller of the business. While sellers are often keen to move on after the sale, receiving email, phone or video support from the seller goes a long way to ensuring that you are able to successfully maintain the business on your own.
How is a Turnkey Business different from a Franchise?
When many people hear the word “turnkey” they immediately think of franchises. While turnkey franchises and turnkey businesses share many similarities, they are not the same thing.
Franchises operate as an umbrella, with each business under the umbrella forming part of a chain, all using the same business name and branding.
The creator of a franchise, otherwise known as a franchisor, creates a business model that is then sold to business owners as a turnkey solution. After purchasing a franchise business, the new business owner enters into a contractual relationship with the franchisor. The business owner then has to pay ongoing franchise fees or commissions to the franchisor for the rights to use the franchise model and operate under their umbrella.
Turnkey businesses, on the other hand, are lone entities, operating independently from each other.
Turnkey businesses are bought outright, with the seller of the business having no say over future operations. Turnkey business owners are their own bosses, maintaining complete financial and managerial independence.
Turnkey business opportunities often have higher net profit margins than turnkey franchise opportunities, as the business owner doesn’t have to pay any ongoing fees or commission.
The Advantages of Buying a Turnkey Business
The main drawcard of a turnkey business is convenience.
Turnkey businesses come complete with an established customer base, brand recognition, and a proven track record, providing the new owner with a solid foundation to build on.
The new business owner doesn’t have to spend time sourcing suppliers, materials, and employees. They don’t have to establish a product-market fit or piece together a reliable supply chain. Most importantly, they don’t have to endure the inevitable mistakes that are made during the startup trial and error process.
Apart from the initial cost of purchase, the buyer of a turnkey business likely won’t have to outlay large sums of money to maintain the business as all the necessary elements should already be in place. The owner can choose to invest extra capital to facilitate growth as and when they please.
Sourcing growth capital for a turnkey is also more convenient as pre-existing businesses have an established financial history. Being able to demonstrate the business’s profitability and growth potential greatly increases your chances of successfully applying for a loan.
If you acquire a turnkey Amazon FBA business, you may also be eligible for the Amazon Seller lending program, an initiative offered by Amazon to provide sellers with short-term financing to help scale their businesses. This program is only available to sellers who have a proven track record of increasing their sales and is therefore not available to sellers starting a business from scratch.
When purchasing a turnkey business, you may also be able to take advantage of seller financing. In a nutshell, this process involves the buyer paying a percentage, say 80%, of the sales price upfront, and then essentially borrowing the remaining 20% from the seller. The buyer will then pay off the outstanding balance over a set period of time.
The Disadvantages of Buying a Turnkey Business
As advantageous as turnkey businesses can be, there are a few negatives to counterbalance their many positives.
Turnkey businesses are often fairly expensive because they’re are ready-to-go, mature assets that are proven to be functional or profitable. While much hard work has been put into building up the business, and the profit and loss (P&L) statements can justify its cost, the higher sales prices of turnkey businesses can be a turn-off for interested buyers.
Many of the downsides of turnkey business come with inheriting someone else’s work. The previous owner will have structured the business to suit their way of doing things and adapting to this as the new business owner can be challenging.
When you take over the business, you will inherit any existing problems such as unreliable suppliers, or a poor brand reputation. You could also be locked into contracts and obligations with suppliers or contractors that you aren’t interested in maintaining.
Putting your stamp on a pre-owned business can also be tough. Turnkey businesses are well-oiled machines, so making too many changes could upset functionality and negatively impact overall performance.
While some of these problems can’t be avoided, others can be mitigated by performing thorough due diligence before purchasing a turnkey business.
As you tick off each item on your buyer due diligence checklist, don’t be afraid to ask the seller questions about contracts, leases, cash flow, and logistics. The more you know about the business, the better equipped you’ll be to make an informed buying decision.
Why Online Businesses Are Well Suited to Be Turnkey Assets
Many online businesses, if properly structured, are relatively passive and simple to maintain. This is particularly true of content sites. This means that, like turnkey businesses, online businesses are often easy to wrap in a bow and pass on to a new seller.
Amazon-backed business models like FBA, KDP, and Merch, benefit from operating within a fairly uniform structure. While each separate business will have its own nuances, they are all governed by Amazon’s rules, similar to each restaurant within a franchise.
Operating within these confines, Amazon businesses are well-suited to be groomed into turnkey assets by founders.
Where to Find Turnkey Businesses for Sale
Turnkey business solutions are most commonly bought from online business brokers or through private sales.
The benefit of buying through a private sale is that you are in the driver’s seat throughout the whole process, dictating your own terms and timelines. The downside is that you have no one to fall back on if things get complicated.
Many people believe that buying a business through a broker is more expensive than private sales as they think they are absorbing some of the broker’s fees and commissions in the sales price. This is not the case. Sellers are liable for all fees, they are not included in the price of the business.
Buying through a broker also lessens your workload. You don’t have to spend hours tracking down sellers. Brokers tend to have dozens of businesses on their marketplaces ripe for the picking, all you have to do is sort through them.
Most brokers vet businesses before offering them to buyers, so you know that the businesses for sale are legit. (That said, it’s important to do your own due diligence to make sure it’s the right business for you.)
Full-service brokers like Empire Flippers also hold your hand through the negotiation and migration processes, greatly reducing the risk of important details falling through the cracks.
How to Buy a Turnkey Business
Turnkey businesses are a great opportunity to be your own boss without having to spend sleepless nights creating a brand new business that may not succeed.
We may be a little biased, but the Empire Flippers marketplace is the ideal place to find turnkey online businesses for sale.
To take the first step towards owning your own business, browse through our marketplace to create a shortlist of turnkey businesses that pique your interest.
You can use the various filters to narrow down your ideal monetization type, price, etc. We also conduct interviews with many of the sellers to help buyers get a feel for the business and the seller they’ll be doing business with.
If you’d like some more guidance on how to buy a turnkey business, schedule a call with one of our expert sales advisors who will walk you through everything you need to know.
