Investing in Inflatables

Inflatables

I am one of those people that when I browse the aisles of Costco and notice a large inflatable bounce house blown up and on display, the first thing that comes to mind is not how much fun would this be to own. I am too busy calculating how many weekends of renting it out would it take to pay back the purchase price and start turning a profit. This is just one example of a business asset that could earn you money with some type of monetization strategy. There are a wide variety of other business assets that go up for sale, oftentimes at a bankruptcy auction rather than at Costco, that could be a sound investment.

Some of the business assets that I see going up for sale in on site or online bankruptcy auctions include: inflatables, all types of retail business inventory, restaurant equipment, print shop equipment, office supplies, to fixtures. The inflatables one comes to mind as one that has been coming up frequently of late. Many trampoline parks sprung up after the Great Recession as there was a vast amount of empty retail space. Because of the Recession and because of the Internet’s impact of downsizing or putting several big box retailers out of business, the landlords were looking to fill the space with alternative uses like call centers, schools, churches, thrift stores and trampoline parks. Some of those trampoline parks have gone out of business because of competitive forces, the novelty wearing off, or because rents have increased now that the economy has recovered somewhat.

Even if you can buy a business asset like an inflatable slide for $5 that is worth $5000 brand new, it does not do you any good if you cannot monetize it. It is important to have a strategy in place to generate income from the asset. Here is the thought process I would consider:

  1. Can I sell it someone else? If you buy an inflatable slide at a bankruptcy auction, is there room to turn around and sell it to a trampoline park operator or inflatable rental company at a profit? Obviously they are going to want a good deal, so you can’t just buy it a good price, you need to buy it at a great price. As people used to joke at foreclosure sales, the resale market is terrible right now, so you better “steal” it when you buy it.
  2. Can I sell it to someone and finance the purchase? While you may not be able to sell the slide to the local trampoline park, maybe you can sell it to someone you know or that you find through Craigslist that wants to operate this type of business but does not have the means to purchase a $1000 slide. Allowing them to pay you back over 10 weekends in the summer might be a good way to expand your pool of buyers. Obviously you would want to do some major due diligence on anyone you found through Craigslist.
  3. Can I find someone to operate the business for me? Leasing space and operating a trampoline park sounds like a full-time, high overhead undertaking. The only thing that makes sense is renting the slide out for birthday parties, etc. I would look to setup the website, buy the insurance, etc. but try to find one person to handle everything: taking the calls from people wanting to rent it, delivering the slide, picking it up, maintaining it, etc. A lot of people like a guaranteed income or salary (even if it is part-time) rather than taking business risk. You are putting up the capital, they are putting up the work.
  4. Can I operate this business myself? This would not appeal to me at all, but this might appeal to someone who has extra free time on the side to actually run the business. This is definitely the type of business you could run on the side.


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