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Buying a small business

Old 01-09-2019, 10:37 AM
  #1  
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Default Buying a small business

Over the last few months, I've just lost all motivation to work. Too much stress, not enough pay, never can take a true day off (I've worked every PTO day), not enough resources due to budget (I can't add headcount), etc. Basically the company wants a Mercedes, but is operating like a Kia. No matter how much you mod the Kia, it is not a Mercedes. Plus after all that I do, people still complain about my team (when they're not the problem).

Anyway, I've been talking with the wife about possibly buying a business. We've been looking on https://www.bizbuysell.com/ and some other sites and found a few that could be interesting.

Here's where I have a problem. I don't know anything about running a business and I understand that just because I know about the product, doesn't mean I can run the business. There are a lot of things going on behind the scenes (tax IDs, lease agreements, purchasing, invoicing, equipment expenses, etc) that I will need to handle. I also see a lot of numbers on those business-selling sites that seem too good to be true. A business selling for $400K, but a cash flow of $250K annually (after expenses)? That doesn't make sense because after less than 2 years you're already profiting? Why would they even sell it?

The goal is for me to continue working while my wife can leave her job and run the business. Once business picks up and finances can support both of us not working, we can both put 100% of our time into it. Would like positive cash flow within a few years. Would be nice to have something with very few employees, as more people is more headache. I will consider adding more employees if business picks up. There's so many things out there from coin operated laundromats to doctors offices to machine shops to well developed work-at-home affiliate marketing companies.

I've also learned that just like realtors, there are business brokers who can help you. I did not know this so I might contact one in my area to start an initial conversation.

For those of you who have done this, or run a small business, can you share any insight?
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Old 01-09-2019, 10:41 AM
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Default Re: Buying a small business

Get a broker

you have to spend a lot of money to buy a business that would actually support someone as a full time job
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Old 01-09-2019, 10:41 AM
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Default Re: Buying a small business

My best friend did this for years. He is now looking for a full time job with benefits and a reliable paycheck in the IT sector.

I asked him why, and he said because when the money is there it's great, but when it's not it can be shocking/scary. He was in the restaurant industry and said finding good people, managing bad people, worrying about complaints and lawsuits didnt make it worth it in the long run.

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Old 01-09-2019, 10:41 AM
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Default Re: Buying a small business

Dont be an entrepreneur. Its not worth the hate.
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Old 01-09-2019, 10:43 AM
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Default Re: Buying a small business

Why don't you invest in property. Rent it out for supplemental income. Steady cash flow for years at a time. Taxes structure is relatively easy once you sell. With inflation alone, you might be getting 2-3% per year.
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Old 01-09-2019, 10:43 AM
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Default Re: Buying a small business

Please make sure your personal affairs are in order, wouldn't want to be in more debt.

I feel you on almost everything you stated about your work environment.
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Old 01-09-2019, 10:45 AM
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Default Re: Buying a small business

Aren't you in IT? Why not start a business that's related to what you do and go from there?
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Old 01-09-2019, 10:45 AM
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Default Re: Buying a small business

Another reason is because my wife's boss (small business) is going to be retiring soon. His son is not taking over the business so he will likely sell.

No, I'm not buying it because it will be in the millions.

But my wife needs to work and she doesn't have marketable skills. If she starts somewhere new, she'll have like a 50% pay cut most likely. I think it might be a good opportunity to "explore our options". We do have the funds to give it a shot. Worst case, we sell the business again at a loss and it won't hurt us THAT bad. I'm not talking about buying a $10M business. Looking at long time running bike shops, coin operated laundry, etc.
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Old 01-09-2019, 10:45 AM
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Default Re: Buying a small business

Goodluck Shamoo!
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Old 01-09-2019, 10:47 AM
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Default Re: Buying a small business

Start your own business, don't buy someone else's failed dream
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Old 01-09-2019, 10:48 AM
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Originally Posted by vLad11591 View Post
Why don't you invest in property. Rent it out for supplemental income. Steady cash flow for years at a time. Taxes structure is relatively easy once you sell. With inflation alone, you might be getting 2-3% per year.
I do have property, but it is local to me. Even though home values are crazy high, rental rates aren't proportional. A $800K home will rent for maybe $3200/month if you're lucky. And these are just town homes. Yes, I can look outside of SoCal, but it isn't that easy.

Originally Posted by tony_2018 View Post
Please make sure your personal affairs are in order, wouldn't want to be in more debt.

I feel you on almost everything you stated about your work environment.
Agree. That's why I want to get a broker and really understand what I'm getting myself into. Buying a business is fine, but what if it immediately needs $150K in equipment, repairs, taxes, etc?

Originally Posted by BeeResp0nsible View Post
Aren't you in IT? Why not start a business that's related to what you do and go from there?
Yes, I'm in IT but I'm in a senior management role. I manage people who do the work, as I do not do it myself. I understand things from a high level view, and my engineers do the "dirty work" so to speak.

I am looking at other places to work, but wanted to explore this business thing too.
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Old 01-09-2019, 10:49 AM
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Default Re: Buying a small business

Most startups in the tech field usually hope some fortune 500 see's the potential and get bought out.


@shamoo if your wife is comfortable where she works I think its time to get her out of her comfort zone and take in more work from the boss and have the boss shadow her.
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Old 01-09-2019, 10:49 AM
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Default Re: Buying a small business

If your small business does well you'll be working even MORE than you currently are with even less ability to take days off and vacations. You'll love the freedom at first but once it gets real and hopefully does well you're going to be wishing you had the old job for paid days off/ sick time.

90% of why I sold my last business is it was growing too fast and I was working 8am-6pm, coming home for dinner with the lady and hopping back on the computer. Add in working Saturdays and sometimes Sundays and she was ready to kill me.
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Old 01-09-2019, 10:49 AM
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Default Re: Buying a small business

Shamoo, it sounds like you just need to find a new job.
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Old 01-09-2019, 10:51 AM
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Default Re: Buying a small business

Originally Posted by 2LEM1 View Post
Start your own business, don't buy someone else's failed dream
I could, but then I'd be starting from scratch. It would be YEARS before I made any sort of usable profit. My wife's making maybe $75K now so I'd like to at least clear that. I don't think you'd get that starting fresh.

Trying to look at things with a cash flow of a couple hundred thousand and established.

Originally Posted by The GreenD16 View Post
Shamoo, it sounds like you just need to find a new job.
Yes, that too. And I'm working on that.

Wanted to look at this option too. Remember, it is for the family. I will continue working until the business is viable/profitable enough where I can quit and it can sustain my income and hers.
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Old 01-09-2019, 10:51 AM
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Default Re: Buying a small business

Originally Posted by The GreenD16 View Post
Shamoo, it sounds like you just need to find a new job.
This. or Turo the porsche.
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Old 01-09-2019, 10:52 AM
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Default Re: Buying a small business

Originally Posted by 5SpdH22 View Post
This. or Turo the porsche.
Lols, I've seen it go for about $500-800/day.

Originally Posted by .Grimace View Post
If your small business does well you'll be working even MORE than you currently are with even less ability to take days off and vacations. You'll love the freedom at first but once it gets real and hopefully does well you're going to be wishing you had the old job for paid days off/ sick time.

90% of why I sold my last business is it was growing too fast and I was working 8am-6pm, coming home for dinner with the lady and hopping back on the computer. Add in working Saturdays and sometimes Sundays and she was ready to kill me.
Agree. But I'm thinking if I can clear good revenue and make even more than I do now, I can hire someone to help. Or to take over while I take a step back from the day-to-day.

I know it is hard. Otherwise everyone would do it. Just wanted to get some insight. Looks like everyone is saying don't do it.
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Old 01-09-2019, 10:52 AM
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Default Re: Buying a small business

Open a franchise ... Chipotle!
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Old 01-09-2019, 10:53 AM
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Default Re: Buying a small business

Originally Posted by shamoo View Post
I do have property, but it is local to me. Even though home values are crazy high, rental rates aren't proportional. A $800K home will rent for maybe $3200/month if you're lucky. And these are just town homes. Yes, I can look outside of SoCal, but it isn't that easy.

Believe it or not, we have property owners from Chicago, Cali and ATL buying homes in Austin, Tx. ****** hate the lousy Chicago bitch, almost choked slammed her *** one time.
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Old 01-09-2019, 10:53 AM
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Default Re: Buying a small business

I worked the car dealer biz (service) for about 18 yrs. 5 years ago a I bought a reputable auto repair facility and love it. It's been very rewarding. Seller used a broker. I'll warn you...trying to buy/own your own business is a very long and tedious process to get going...can be frustrating. Also expect to put minimum 10% down out of pocket for a commercial loan. I honestly couldn't go back to the dealer biz and can't see myself doing anything else. I'm currently in the process of attempting to buy another repair facility because I would like twice the headaches ;p

I wish you the best of luck and let me know if I can help answer any questions for you
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Old 01-09-2019, 10:54 AM
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Default Re: Buying a small business

Originally Posted by shamoo View Post
Lols, I've seen it go for about $500-800/day.
If you detached yourself from the car, rent it out, pay it off quick, buy another, rinse repeat, get yourself into that 458 and become YouTube famous
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Old 01-09-2019, 10:58 AM
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Default Re: Buying a small business

You can get into street wear and reselling shoes. Buy a bot that runs a script, guarantee yourself a pair of coveted shoes that may retail at $200 but sell on the secondary market for 800+.

Then sit on them, and sell whenever you want on online/phone based apps like StockX. You'll usually earn 50% on your investment every time. My friend does this and makes a good amount of passive income on the side, and has about $40k worth of shoes as part of his networth. Seriously it's really easy, but I'm lazy and I would have to buy a good computer and I'm lazy. Maybe when I buy my gaming rig.

Also.... places like Florida, there is always investment property opportunity.


Like Grimace said, once you own a small business, you being the boss, you have to invest 70+ hours for it to be successful. Something like a coin laundry shop wouldn't be too bad, or like a bagel shop/donut shop. Most start ups fail within 2 years. You realllyyyyyyy need to put in hours for it to be successful and you won't see cash flow in most cases until year 3 or 4. Unless you're doing some contracting work like HVAC or plumbing, or odd job construction work.

Also you need to make sure whatever business you're buying isn't under fire and left a track of bad employees or clientele. Why would a business sell 5 years in if they're successful?
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Old 01-09-2019, 10:59 AM
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Default Re: Buying a small business

Good IT contractors are difficult to find. There’s always a market for them. Nearly every business with over 10 people has a private IT company and they aren’t cheap. Need to handle the whole package though. Hardware, software, security, etc.

As far as buying a business. You have to be careful and really understand the numbers. A lot, or should I say most, businesses anywhere close to your price range will inflate numbers to make the business worth more on paper. It’d be difficult to value the business yourself if you do’t know that business inide and out.
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Old 01-09-2019, 11:00 AM
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Default Re: Buying a small business

Originally Posted by shamoo View Post
Agree. But I'm thinking if I can clear good revenue and make even more than I do now, I can hire someone to help. Or to take over while I take a step back from the day-to-day.

I know it is hard. Otherwise everyone would do it. Just wanted to get some insight. Looks like everyone is saying don't do it.
I had a hard time finding employees. I could only imagine how hard it'd be finding someone I trusted enough to take over running it for me. No one is every going to care like you do they'll just collect the check and half *** it unless you get lucky finding someone. I tried 1 or 2 people and nothing worked out but selling it.
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Old 01-09-2019, 11:03 AM
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Default Re: Buying a small business

OP, running a business you're not passionate about and doing just for the money doesn't seem advisable especially in today's small business environment. Would you consider consulting in IT since you've been in the field for a while? That seems like a more viable option with more freedom.
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