If you’re looking for an investment that will allow you to be your own boss, increase your financial security and keep your working hours flexible – you’ve come to the right place. This guide will take you step by step through the process of buying a work from home business, from your initial search through to due diligence, valuation, and financing.
There are a wide variety of South African businesses that can be operated from the comfort of your own home, and financial aid available to help you purchase them without emptying your bank account. From self-sufficient e-commerce businesses to SMEs with integrated remote working systems - we’ll show you how to find the perfect work from home business to suit your needs, how to conduct the proper due diligence, and how to finance the acquisition.
How to Find the Ideal Work From Home Business
The work from home businesses category on BusinessesForSale.com is one of the fastest growing on our website, and is the best place to start your search for a remote business to buy. It shouldn’t be a surprise that this category has been growing so fast: in the years following the Covid-19 pandemic, many people have been searching for profitable home business ideas.
In this category you’ll find all kinds of businesses offering flexible services with movable headquarters. You can add additional filters to your search for things such as asking price, net profit, turnover, and location. You can also search for specific industries that match your previous experience.
If you want a bit of extra security when purchasing a work from home business, you might want to consider searching for work from home franchises. Franchises usually come with a higher cost of entry, but in return they allow you to get on board with an established brand that has a strong existing customer base.
This extra level of security often makes franchising a more appealing proposition to banks and other lenders. They are more likely to finance your entry fees and purchase costs if they think their investment is safer, so obtaining finance can often be a much easier process than with a startup or small business.
What are the Best Home Business Ideas in South Africa?
The best home business ideas in South Africa are ones that combine high profit potential with a low cost of entry. Any business you can manage just using your laptop, and which provides services instead of products, will be both flexible to start and scalable if you find success. Here are some small business ideas from home which you should keep an eye out for:
- Event Planning
- E-commerce
- Graphic Design / Copywriting
- Marketing and Web Design
- Tutoring
How to Conduct Due Diligence for a Work From Home Business
When buying any business, its important you conduct a thorough due diligence process. You’ll need to ask questions about the business’ finances, its history, its staff, its systems and the technology it uses on a day to day basis.
Make sure you have a firm grasp of all the opportunities and challenges the business has faced up to now, and a vision for how you can steer it in a more fruitful direction. For further detail about the kinds of questions to ask before buying, read our article The Ten Essential Questions all Business Buyers Should Ask Sellers.
Some key questions to ask during the early stages of a deal include:
- Can you walk me through the history of your business, and the different products/services you’ve offered over the years?
- Can you break down your revenue and profits across the various products/services?
- What challenges and worries have you encountered with the business to date?
- What would your customers and competitors say you do best?
- To what extent can the business be expanded, and why haven’t you done so already?
Some other key steps you may want to consider during the due diligence process include hiring commercial lawyers, accountants or financial advisors to double check the fine print. You should also thoroughly examine all the necessary documentation, such as financial statements, contracts, licenses, and intellectual property.
How to Value a Work From Home Business
The last and most important part of the due diligence process which you should explore before committing to your purchase is valuation. To help sort out the sellers who offer unrealistic valuations of their business, you can use BusinessesForSale.com’s free valuation tool ValueRight.
After obtaining a few key pieces of information from a seller, you can conduct a valuation of their business in under an hour (or under five minutes with ValueRight Express). All you need from them is:
- A profit and loss statement
- Their salary and benefit information (for all shareholders)
- Financial statements for the last three years (one year minimum)
If your seller provides you with these figures, you can evaluate their business’ potential yourself and see if it matches up realistically to the asking price they’re offering. For more detailed information about valuing a business, read our guide on How to Value a Business For Sale in the South Africa. To learn about the different valuation methods and formulas, read our article Valuation Methods and Formulas Explained.
Tip: Work From Home businesses are often asset-light, meaning valuation methods which are well-suited to businesses with high equipment/overhead costs (such as EBITDA multiple) might be less effective. Instead, try using Sellers Discretionary Earnings (SDE) valuation.
Financing Your Purchase of a Work From Home Business
There’s no getting around the fact that buying a business is expensive, and buyers should do their research thoroughly before committing to a purchase. But if you’ve found a work from home business that you’re ready to invest in, the good news is that you don’t need to provide all of the funding for it yourself.
There are many different forms of financing to help you buy a business, and banks and lenders will cover a portion of the up-front costs if you can demonstrate a future return on their investment. To do that, you’ll need to provide them with a strong business plan and have a good credit score, as well as prepare all the necessary documentation.
As part of your business plan, you’ll need to conduct research into your target markets, competitors, and the risks/opportunities that buying your target business will entail. If you’re buying a remote, digital-first business you may not need to consider factors such as geographical location – but greater attention might be needed in areas such as SEO, social media and digital marketing. How will your business stand out in organic search, and will you need to factor in cost-per-click (CPC) to your marketing budget?
Once your plan is in place and you have access to enough liquid capital to apply for a loan, its time to start exploring the available options. Some different forms of financing available to entrepreneurs include:
- Unsecured loans
- Commercial mortgages
- Asset finance
- Asset-based lending
More information about all these forms of lending can be found in our Loans to Buy a Business in South Africa guide.
Building Company Culture & Productivity
Beyond the usual forms of due diligence, you also need to have a thorough understanding of how the business you’re buying operates remotely. If you’re buying a sole trader or self-sufficient e-commerce business, you’ll largely be able to set the pace yourself. But if you’re buying an SME with employees working remotely, you’ll need to get to grips with both the technology that facilitates this and the culture in place within the company.
What motivates your staff? How can you keep track of the work they’re doing remotely without breathing down their necks? And how can you build an inclusive company culture with employees based all around the world? Answers to these questions can be found in our article The Secrets to Successful Home Working.
Here are some key tips for building a strong company culture and keeping productivity high while working remotely:
- Conduct regular morning check-ins across the whole team, where everyone is encouraged to talk openly
- These check-ins should be led by a senior staff member who tries to keep the energy level high, and makes room for stories and anecdotes that keep the mood light
- Provide your employees with monitors, chairs and anything else that can make their working day more comfortable, and increase their motivation
- Pay close attention to staff onboarding and do this in person whenever possible, to make new employees feel like they have a stake in the company
- Integrate efficient technology to allow easy communication and tracking of work – a consultant can help you set this up if you are unsure where to start
If you’re buying a small business and thinking of expanding it, you might also want to consider hiring a co-working space for one or two days a week. This can be a less expensive way of bringing your whole team together than renting a permanent office, and can also give you an opportunity to spend some time together once you’re off the clock.
Buying a Work From Home Business in Another Country
One of the benefits of buying a work from home business is being able to operate it from anywhere in the world. Taking that idea a step further, you might be wondering: can I buy a work from home business in another country? You certainly can.
While you may want to travel abroad to visit the business and its owners in person before you buy, there are many kinds of business that are well-suited to absentee ownership. These can be effective passive money-makers that don’t require constant attention, or even operating from the same country.
Some kinds of business that can be well-suited to absentee ownership include:
- E-commerce businesses. Especially those which don’t need centralised warehouses full of stock
- Vending machines and ATMs. These can generate income from a fixed location and only require small outgoing costs in maintenance
- Laundromats. Similarly to above, laundromats can often be run with very little management
- Car wash. Automatic car washes allow customers to simply drive their cars through the wash, needing minimal supervision.
If you’re buying a business abroad, you may want to look into hiring an immigration lawyer who will run you through any visa requirements or restrictions involved in the process. This will help you avoid any nasty legal loopholes, which could cause delays in setting up your business. For more advice about buying a business in a foreign country, read this article.
Frequently Asked Questions
What is the most profitable business to start from home?
Profitable home working businesses that you can set up easily include e-commerce, consulting, marketing, graphic design, copywriting, tutoring, and event planning.
How to open a work from home business?
Launching a work from home business often has lower overheads and equipment costs than other kinds of businesses. You could get started with just a laptop, a desk and a good idea.
Can I buy a work from home business?
Buying a work from home business can provide you with extra financial security and an existing, proven customer base as opposed to launching a risky startup. You can find many work from home businesses for sale for a wide range of prices.
Can you legally run a business from home in South Africa?
Yes, its perfectly legal to run a business from home in South Africa. You may need to obtain a general business license from your city or state, depending on where you live.
What is the cheapest business to start from home?
Some businesses with low entry costs that are cheap home business ideas include: e-commerce, consulting, and event planning.