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Buying A Small Business
Posted by B2B on: 2006-03-10 10:14:44
Buying A Small Business
James McKenzie
Buying A Business
I would like to offer lots of real life experience about buying and operating a business.
When I bought my business - I didn't have anyone that I could ask for experience. There seems to be so much reluctance from many to offer experience without having to pay for it.
I sure wish I could have read something like this before I made the purchase.
If you are a corporate person or have never owned or wanting to own a business -this is especially for you.
I BOUGHT ONE
Well well - how about a real life experience of what happened to me.... This is real. I worked many years in the telecommunications industy. I saw myself as very blessed and fortunate to have done well. I always had the idea of owning my own my business. I thought BIG. Hey - I wanted to live the American dream of owning a business. Boy, I thought business owners had it made. Work when you want, hire a manager to run the joint, take vacations, drive a Cadillac, oh this list went on and on.
I did well in real estate, every home I bought and sold, I made good money. I went up and up salary, but I still wanted to be the boss. I never received the promotions that I thought I would. I've heard an old saying - more is never enough.
I didn't think I was being greedy - it takes a lot of income to support a family especially if you want to take a vacation each year.
I had saved a nice some of capital over my career. I thought that now or never is the time to buy a business.
I was very conservative when looking for the right business.
I thought the only way to do it right was to buy a live, working business.
I only wanted to part with some of my capital, but I needed enough income to support myself and my family.
Man - I had so much luck I knew I could do this with hard work.
I started contacting business brokers - this got interesting. Business brokers find buyers for businesses. There were all types of these guys and gals. Many seemed professional, some didn't have a clue. I found out that brokers usually charge 10% of the selling price as commission. Some brokers tried to teach me what to look for, others wanted to have me look at businesses. Some will not return your calls.
It seemed on paper that I needed an expensive business to produce the revenue and income that I needed. I only wanted to spend maybe $30K. You will not find a business for $10K and pull a $100K salary from it - it don't work that way!
If you want a $100K salary, you will probably need a business that sells $1M in product or goods.
So - what is it really like owning a small business?
We've all seen the entrepreneur of the year all dressed up and smiling. Isn't that what we all want? The Mercedes, the Cadillac, the vette, the harley, travel, business owner of the year award, the fine cigars and restaurants ... Let me give you the true side.
I'm not trying to shatter any ideas that you have - it's just some cold water of reality.
IF YOU HAVE MONEY TO BUY A BUSINESS AND ARE BORED - INVEST IT, TAKE A VACATION WITH YOUR FAMILY OR SOMEONE AND DO VOLUNTEER WORK. BE A CONSULTANT FROM YOUR HOME OR RENT A SMALL OFFICE FOR $200 PER MONTH (WITH NO LEASE) THAT WAY WHEN YOU ARE SICK OF IT YOU CAN WALK AWAY.
IF YOU ARE BLESSED WITH MONEY TO PLAY WITH - BUY A LITTLE BUSINESS TO GET YOUR FEET WET - SOMETHING YOU CAN COMPLETELY THROW AWAY IF YOU GET SICK OF IT AND CANNOT SELL - NOTHING THAT WILL FORCE YOU INTO CHAPTER 7 !!!!
IF YOU THINK YOU CAN BUY A BUNCH OF SMALL BUSINESSES AND BE A MILLIONAIRE - YOU ARE DECEIVED. YOU WILL HAVE A MASSIVE AMOUNT OF STRESS THAT YOU CANNOT GET YOUR ARMS AROUND. IT WILL BE LIKE TRYING TO HARNESS A TORNADO.
THE TRUTH - BUYING AND OWNING A BUSINESS
You ain't going to be rich.
You ARE going to be working 100 hours per week.
You will NOT get or take vacations with your family.
If your spouse is not very very very supportive - you will get a divorce. You will marry the business.
Your children are not going to like playing there.
You will NEVER get ahead (you will try to somehow find a way to get the business you purchased to somehow look good enough on paper to sell - after loosing everything you put into it).
Most successful small businesses are family owned and were started from scratch - That way mom and dad can make the kids work on weekends without paying overtime. Mom and dad can work 100 hours per week and only get paid on paper for 40 hours. This method makes the business look good on paper (low overhead).
All people (including you and me) spend a lifetime trying to find a good way to earn good money. Do you think that a business owner that has found a good business is just going to sell it to a stranger and walk away? They just want your money so they can pay off their debt and start up again as YOUR competitor.
They are not going to share all of their learned experience and secrets with you. - They just want your money so they can pay off their debt and start up again as YOUR competitor.
Finding good dependable employees is VERY VERY VERY VERY difficult. You CANNOT just place a small ad in the Sunday paper and get good responses. The help wanted ads should read "MOST WANTED".
You will be tempted everyday to not pay collected sales tax to the state.
Employees will ask and nag for loans or to drive the company car for a week. NEVER NEVER let employees drive the company car home. You will never get them out of it. This is a trick they all try.
Every employee has a sad story why they need more money. You will let one person borrow and kick yourself for doing it.
You will vow to never buy anything on credit again (even that harley).
Your spouse and in-laws will nag you forever to get rid of the business because they never see you.
NEVER NEVER buy business services from anyone in your church or neighborhood. This can cause a major strain on relationships WHEN you fall behind on bills and cannot pay them. You will get sick of driving past their house and they will tell other neighbors about you.
You will try and cut cost by hiring someone for $7 /hour - then get sued by this person.
Most people you hire for $7/ hour know employment laws better than attorneys.
Most of the people you hire know how long they have to work so they can quit and draw unemployment.
Things will disappear or get stolen.
Employees will want to work for cash because they don't have a bank account.
Employees will expect a bonus even when the business is broke. They will accuse you of taking all of the money out of the business.
You will find the perfect person to hire - then find out they do not have a way to get to work. They lost their license becuase of DUI.
You will become the scum of the earth WHEN you get behind on bills.
You must be able to pay ANY employee at least $15/ hour or the only people you find will be druggies or chronic alcoholics!
Businesses are like the internet - everyday there is a new competitor!! Everyday someone is looking at you and trying to figure out how they can do the same thing - cheaper. (You need to be this person). Don't buy someone elses problems.
The previous owner failed to tell you of all of the side jobs they had to funnel money into the business to make it profitable.
At 5PM everyone is gone. You will be there until at least 10pm.
No employee is going to care about the business or you - they are only there for the $$.
You better have several good attorneys. YOU WILL BE SUED!!!! Everyone thinks you are rich.
The employees that get close to you personally will be come your worst enemy.
If you buy a business - you better be able to fire everyone in 3 months and hire a new crew. They will love you at first - then learn to hate you. You make one change to anything in the business and they will never forgive you. Believe me!! If the employees are so specialized that you cannot replace them easily
- DON'T BUY THE BUSINESS!!!!!
DON'T BUY A BUSINESS ON A GUT FEELING. THAT SWEET LITTLE MAN OR WOMAN WANTS YOUR MONEY!
IF YOU BUY THE BUSINESS - ASK YOURSELF CAN THE BUSINESS BE PROFITABLE ON HALF OF THE REVENUE. THE PREVIOUS OWNER IS GOING TO BE YOUR COMPETITOR
10 out of 10 business owners would trade places with you in a second!! I don't care if you just got laid off.
If you would like to read more visit my-business-review.com
James McKenzie
About the author:
An experienced small business owner who sought the American dream of owning a small business. Offers a "real life" story of what it is and can be like owning and operating a small business.
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