Business owners

[nxhappy]

It's not and keeping customers and employees is the tricky part.

Generally a mass exodus customers is due to changes in quality but if it's done right they don't need to know the company has changed hands.

Employees are harder to deal with. Most are afraid their jobs are in jeopardy so I've found that it's best to be completely honest with them. The ones that leave are always cancerous employees to begin with and I've had very few of those over the years. Most are excited for a change of pace and growth. I have an entire speech about my history as a business investor that's done a great job at quelling employee fears over the years.

That's funny because I have.

Learning the business is the only way to ensure success. Absentee owners never, and I mean never, work. In the beginning it's a scramble to learn something new, that's why you retain the old owners as part of the contract for a specific time along with a withholding of the purchase price that's contingent on a measure of success. It gives the old owners both legal and financial incentive to ensure your success and gives you a timeline to learn what you need to know. That's all part of doing due diligence.

If you think you're the exception than by all means play that lottery. Romanticize it all you want, those are horrific odds.

Like I said, it depends on the business sector. That 80% does not apply to ALL businesses. Not to mention it could cost A LOT more money to buy an established business rather than building from the ground up.

 

[Blown 89]

That 80% does not apply to ALL businesses.

If the 80% figure doesn't apply to ALL businesses what does it apply to?

That 80% figure also includes startups that people can't get off the ground (which costs money). Actual B&M small business failure rates is over 50% in the first two years and closer to 70% after that according to census data. Many of which are companies that are successful when they go under.

Not to mention it could cost A LOT more money to buy an established business rather than building from the ground up.

The buy in price is directly relatable to the companies profit margins. Of course a company that makes you money on day one is going to be worth more than a company that costs you money on day one.

 

[BlckBox04]

The biggest issues with buying a business is a lot of the time skeletons come out of the closet long after the previous owners are long gone and cashed their checks. We've purchased a couple smaller competitors in our area and I've had debt collectors coming after me for insane amounts of money or you find out people were doing work against rules and regulations to just get paid and disappear. It's a slippery slope.

 

[czwalga00gt]

I started www.lightningcornhole.com on the side of my full time job. I work crazy hours. Don't expect to see cash in my pocket until year 3. Lots of expense and inventory. CNC/Laser machines, 4000 sq foot building etc.

I ask myself all the time if its worth it. I haven't borrowed a single cent and it's still very stressful. Without knowing what type of business; i wouldnt advise quiting your day job. My day job supports me and the new business. I couldnt really imagine doing that with borrowers hounding at me....


Also, if you're driving a modded cobra and taking out loans for your business while keeping the cobra; you probably don't have the dedication you need, unless you have some absolutely killer idea that would take the world by storm. Try and self fund as much as possible.

 

[Blk04L]

A lot of truth in this. Also plan on the first 2 years being hard, it's true that most fail in the first two years.

Edit:
Another thing to ad, is if it's a service type business. Don't live job to job. Have some money on the side to take into account slow/non payers. I have a customer now who owes me a few grand and get the joy of sending it to collection/court process in 15 days.

+1. When my dad started his company, he didn't get a paycheck for the first three months. And, it was a small check to boot.

+1 to expecting not to get paid for every job. Probably in the last decade he is owed around 200k from developers who never paid in full. (Especially around the slowdown of 07-09).

Are you single/have a wife/fiancee who has a decent job?

GL

 

[Blown 89]

I started www.lightningcornhole.com on the side of my full time job.

I just sent your weblink to a few event service companies here in the valley that run cornhole events that my wife works with. Brilliant idea.

+1 to expecting not to get paid for every job. Probably in the last decade he is owed around 200k from developers who never paid in full. (Especially around the slowdown of 07-09).

This. So much this. I employ someone whose full time job is tracking down late payments. Collecting money is an absolute nightmare. It's always the big companies too. Planters Peanuts currently owes me enough money to pay for another V wagon.

The biggest issues with buying a business is a lot of the time skeletons come out of the closet long after the previous owners are long gone and cashed their checks. We've purchased a couple smaller competitors in our area and I've had debt collectors coming after me for insane amounts of money or you find out people were doing work against rules and regulations to just get paid and disappear. It's a slippery slope.

The Due Diligence process should catch that. If it doesn't your legal team should have laid the groundwork to make that a quick and easy payday.

 

[czwalga00gt]

^ Thanks! Appreciate it.

 

[BlckBox04]

The Due Diligence process should catch that. If it doesn't your legal team should have laid the groundwork to make that a quick and easy payday.

Yes you're right but when you want deals done quick it's easy to overlook minor things. I'm not talking about major issues though.