Back when Bruce Williams had his travel and financial advice show, he used to field a lot of calls from people interested in buying vending machines. He always said that there is money to made in vending machines, but it’s no business for amateurs. The main obstacle, he explained, is that the number of good locations is extremely limited, and the profitable locations are already taken. To place a machine in a good location you would have to convince the owner that you, a newbie, can do a better job of servicing your machine than the guy who’s already been successfully doing it for years. And even if you can do that, you’d still have to wait for the current contract at that location to run out.
The free market doesn’t work that way. Any low hanging fruit is already picked.
If there were an industry that profited that easily, then everyone would start doing that, which means that profits would go down. There is race to the bottom until no one in the industry makes a profit, and enough actors leave it to be sustainable.
If you want to make a profit, you have to have a monopoly. Now by this, I don’t mean that you have complete control over an industry, but that you have exclusive control over something unique to your industry.
Whether that is your personal ability, excellent employees that you find or train, or a product or service that you have improved in quality or production costs in a way that your competitors cannot match.
The only exception to this that I know of is bars. Alcohol is very profitable, and people seem to like it. I know quite a few bar owners that have no idea what they are doing, yet manage to stay profitable due to this.
Of course, the monopoly here is the liquor license, which is pretty hard to get in most places.
Personally, I spent 20 years working for other people, in many industries, sizes of operation, and in many capacities. I spent quite a bit of that time managing. These experiences helped me when I opened my business nearly 4 years ago. They still didn’t prepare me for all the things that are involved. (While I hired, fired, and managed employees, I never had to actually negotiate or pay the lease, never got to have any input in the build-out, much less having to design ALL of it, never had to deal directly with payroll taxes, worker’s comp and all that, advertising was always taken care of way above my head. Hell, I had to write my own employee hand book, operations manual, MSDS, cash policies… I could go on about all the things that I have learned to do in this project.)
And that is all before actually getting involved in the actual function of your business.
Between all of this, I work at least 80 hours a week, sometimes as much as 100, not including the time I spend thinking about and working on issues at home. Last year I paid myself about $13,000, the rest I dumped back in to the business to grow.
The rewards are cool. It’s been 4 years since I had a boss that wouldn’t run things the way I thought they should be run, so that’s good. This year, I think is my breakout year. I’ve been profitable most months, even after my draw, and I’ve been taking a much more substantial cut. With 8 employees now, I spend most of my time up here playing receptionist, talking with clients both on the phone and in person. It gives me time to waste here in between clients, and no one to complain about it.
In short, you want to be a passive investor. You can do this by investing in an existing business, where your partner agrees to be the active manager. But there is the risk of your partner cheating you or of the business failing.
Really the best way to be a passive investor is to have enough in stock investments that you can live off the income.
What you mean is that you have to find your market niche. A monopoly isn’t required. Just an under served market for some thing or service. The first step for the OP is to honestly evaluate what kinds of things or services he can do, and then analyze his potential market to see if there is an underserved niche that his product or service can fill.
In reference to OP’s comment about just wanting to deposit checks, if he’s crafty and willing to ship things I have a few ideas of things I need someone to make for my online shop!
It’s under that lottery ticket over there. 
The odds of finding a profitable, underserved niche in any community or industry are pretty slim. Even less so if it’s in any way a desirable niche and not something like septic tank pumping or in-home elder care.
The TL;DR of my post above is that it HAS to be something the business owner is fully qualified to do, if not expert. The idea that someone with vague and general corporate skills can buy into a small business and make it profitable is almost always wrong.
(IME, nowhere more so than if the business involves buying or leasing some expensive piece of equipment, be it a semi rig, a screenprinting machine or shudder any kind of sign-making equipment. You can be taught where the knobs are on this stuff in a few days, but that weekend seminar does not teach you how to really use it, any more than a quick class in MS Word makes you a novelist. Sorry. Seen way too much in this category, including some friends who fell for it.)
The classic way for someone like you to go into business is to buy a franchise. Someone else already has a successful business model and will provide you (some) support. There are a wide variety of franchise opportunities available. Franchisors are supposed to provide you with sufficient information for you to make a reasoned decision before choosing a franchise.
Classic strong franchise opportunities include McDonalds and Dunkin Donuts. (This was the case historically; I haven’t checked recently.) However, these are essentially based on your presumed willingness to make a huge personal and time commitment, which I gather is not what you have in mind. A storage unit franchise might be more your style, but could require more capital than you have available.
Which is awesome, but it takes a lot of capital - probably a couple garbage trucks or a few hundred vending machines.
The big-name franchises have net-worth hurdles. I think McD’s is among the highest - around $2M minimum, I think. Taco Bell is around $500k; I think it’s Arby’s that brings up the rear of the majors at about $50k. (Those are from memory and very approximate, but the point is that you can’t even talk to a major franchiser without a pretty hefty bundle to show them.)
There are ten billion small franchises and those that aren’t scams, or so little boost from the brand name and business model that they aren’t worth the buy-in, are ones that can only succeed on traditional terms - you have to find the niche, the market and the 23 hours a day to make it all work.
From a lot of observations, I am really down on the idea that an average person can just buy into a business and be successful at it. You have to bring something to it, and if that something isn’t hard-won skill and expertise, all the prepackaged help in the world isn’t going to be a good substitute.
Let me see if I can boil this down and make it a little more clear. I would like to make a lot of money without doing a lot of work. I am prepared to invest cash in such an enterprise. Any help?
Prostitution, if you can maintain a clientele that likes passivity.
That, and just invest your money aggressively. There’s probably no active effort you can make that will have a larger or steadier return.
The problem isn’t a matter of you being clear but instead that what you’re asking for really doesn’t exist, unless, as I said, you invest a large amount of money in stocks, bonds or real estate and live off the income.
It seems that what you really want to be is a venture capitalist or investment banker, the pile for either of which starts (barely) at around a million in assets.
That’s actually doable. I know friends who have invested money with people who started gyms and fast food places and are making good money. They get checks every month. The key is finding the right people that have a good track record and you trust. Lots of people will be willing to take your investment, but not all of them will be successful. Even good people can fail.
If you do a lot of networking at the gym, church, neighborhood pool, etc. you will find people who are starting businesses and looking for capital.
Yeah, such things don’t exist, unless you have at least a couple hundred thousand to invest, probably at least a half million, in which case, I can think of a whole lot of opportunities for you. Probably the best investment then would be commercial property. Buy up a strip mall and lease it out.
You could be a silent partner in some start-up business, but you won’t see your money for a while, and you may lose it entirely if things don’t go well.
I would kind of disagree with the statement that you need to know the industry you are getting into. Four years ago, I knew pretty much nothing about dog grooming. But my sister had been grooming for over a decade, so that worked out. For a long time, I figured I would open a restaurant of my own, but this actually works better, because she could actually do the production (with my assistance)while I did everything else needed to run a business. (Now I have a bunch of employees, and they get to do the bulk of the work, yay.) If I had opened a restaurant, I would be the chef, along with the general manager, owner, PR, and financial manager. Actually being involved in the production for 60 hours a week would have made actually stepping back to make sure that everything is running smoothly more difficult. But you DO need to know how to run a business from at least the management of employees and cash side. You can get help from CPA’s, lawyers and a payroll company for the rest if you need it for alot of the bureaucratic side.
As far as monopolies go, (you could call it a niche as well,) I consider reputation to be a monopoly. No one else has my reputation in the area, and that is what is making my business grow very quickly.
Isn’t this what pretty much everyone wants? If some kind of investment that makes a lot of money without effort is so common that random people on a messageboard know about it and are willing to share it, why wouldn’t everyone who has savings do it?
If you have enough money to invest, why buy a business you’ll have to run and don’t know anything about - just buy stock.
Low capital businesses either take a lot of expertise or a lot of work (or both) with a high failure rate.
High capital businesses take a lot of money - at that point you can make a reasonable income just putting that money in the market.
Businesses that you are simply going to invest in and let someone else run are opportunities to pay your accountant to move to the Bahamas and retire on your money. The stock market at least provides a competitive environment for you to select the crooks you want to manage your business/money from. If you are going to have someone else do the work, its going to be hard for the business to be very profitable until it gets to a rather large scale.
I don’t know. Maybe they don’t have as much initiative as me.
For my friends who invested in businesses, the real win was then the businesses were sold. The mailbox money was nice, but they were probably making less than 10%/year on what they invested. That’s like if you consider their monthly checks like interest payments on a loan. But when they sold to a buyer, the buyer paid a lot more than the owners originally invested. The guy who invested in the gym made a lot–maybe 50% over what he invested. So he got monthly checks and then got his whole investment back plus 50%.
However, he could have also lost it all and never gotten anything back. Always keep that in mind.
Is that humor? You’ve all but rejected anything except sitting around catching checks with your mailbox.
Which assumes the operators put in the time and sweat equity to make the business worth something to someone else. A rented storefront and sign alone ain’t worth what they cost.
Invest. Play it safe and buy real estate. Take some chances and play the market. But it still takes work to find the right investment, and if you don’t pay attention to your investment you can just sit back and watch it dwindle away. You might as well be gambling at the casino if you plan to spend the money and not do any work to make it grow.
ETA: And I think you know this already.