*Want to be a first time business owner. Looking for insight, experiences and advise!

[Native]

Hello,

I'm a mid-aged guy looking to buy his first business. I have a lot of motivation and ambition to work for myself. I have saved money, built my credit and put myself in what I would consider, the best possible position to start/buy a small business. I live in a town that is considered one of the wealthiest and fastest growing mid-sized towns (under 50k population but within 15 mins of a large 220k population city). I'm not sure if I want to pursue a complete start up or buy an existing successful small business. I have great credit and great work ethic. I am leaning toward buying an existing business that turns a profit over starting something fresh due to limited profit. I'm curious what people with a lot of experience owning small businesses would advise in terms of buying existing small businesses, financing (seller) and how to capitalize on a great business purchase even when its' not your "American Dream" (sometimes you have to build up to the American Dream!). My details are below...please go easy on me...this is, what I'm hoping, will be a new chapter in my life! Btw, I'm currently employed...biding my time for the right moment.

Mid 30's
Married w/ kids
Do not own home or any other business
$30-40K (liquid assets/cash)
750+ credit scores for both spouse and I

[tallen]

What is your background? What fields do you have experience in? What kinds of things do you like doing, and what do you NOT like doing? What are your interests, or even your passions? Do you like working indoors or outdoors? Would you rather be selling goods or providing a service? What kind of people do you like interacting with?

Small business is all about YOU and what you bring to it, how much of yourself you invest in it. I think it is easier being successful doing something that you have some background in and that you enjoy, than it is taking over a business in which you have no experience and/or are otherwise dispassionate about....

More things to ask yourself: What are your goals for going into business? Are you simply looking for a business that can comfortably support your family while you are your own boss doing something you like? Or are you not going to be satisfied unless you can see the business continually growing and expanding? Some business ideas are easily scale-able, and others not so much.

What is your ultimate end-game or exit strategy? Are you going to want to pass on your business to your kids, or do you hope to see it appreciate in value so that you can sell it to somebody else in the future, making your money that way? Or is the business something that is likely to die with you? Some businesses are so much about the founder/owner and that person's particular skills and talents, that it is really difficult for the business to continue without that person... (something to think about if you decide to buy another business -- how dependent is that business on the skills and talents, or personality, of any one particular person? -- especially if it is the person who is getting out!)

[Harold Mansfield]

I agree with the above, focus on your skills, likes, and interests. Buying an existing, maybe even failing business may be the way to go. The heavy lifting is done and you don't have to start from scratch. If you can find something and identify where they're going wrong, and have solid ideas ( based on your experience and interests) on how that business could be successful under the right management, with min additional investment to get it up to speed and start implementing your ideas, that could be a good way to go.

Just be careful and make sure you really have a plan to turn whatever it is around. I can easily think of 20 bars that could be better, and probably make more money, but I'd really need to get into the nitty gritty including their expenses, and have some additional investment to put into it to implement my ideas to really rock it out.

Starting completely from scratch on something with no skills or experience in that "something" and limited funds, is a rough and expensive road. But taking over something that just needs better management, better product, and better marketing could really work out.

[Fulcrum]

... maybe even failing business may

I would be hesitant suggesting this. There's a reason it's failing and often it's not readily apparent. It's going to take a some skills, patience, and a willingness to lose cash for a few months (if not everything if all else fails) to turn it around.

[Harold Mansfield]

True. If the issue if just poor management, bad service and a bad product that can be fixed if it has everything else going for it. Of course as I said, you need to be realistic about your own skills.

I could turn a bar with potential around because I know that business. And maybe I could apply that same service experience to say an Ice Cream shop. But I would likely need to learn far more things to do the same with a clothing store (which i wouldn't even do), and I would be totally out of my element trying to run a car repair shop.

[cbscreative]

Great points above, about the only thing to add before tallen's questions get answered is to consider the staff when buying an existing business. You can anticipate losing some of those staff, either immediately because some don't like the uncertainty of a new owner, or over time for various reasons. You'll need to plan for hiring and training.

[Wash & Dry]

When you borrow money for a business for most people it turns out to be the worst day of their life. There are a few it luckily worked out for but not most.... not even close. Most of the time it makes it worse than a job because atleast with a job you have a paycheck to pay the bills. That's a risk I'd never take. Most that do wish they didn't.

[bella.lopez]

Don't just quit your job yet. If you're so passionate about having your own business, set up an online store. I would suggest a dropshipping business model as it allows for flexibility in lower risk and minimal financial commitment. See what works for you here and when the money starts flowing easily and as per your desire, you can quite and build an empire with multiple dropshipping stores.

[Harold Mansfield]

When you borrow money for a business for most people it turns out to be the worst day of their life. There are a few it luckily worked out for but not most.... not even close. Most of the time it makes it worse than a job because atleast with a job you have a paycheck to pay the bills. That's a risk I'd never take. Most that do wish they didn't.


I somewhat agree with this. While it sounds good to get money from someone so that you don't have to struggle slowly while bootstrapping yourself, the upside to bootstrapping is that you don't owe anyone or have to answer to anyone, and you don't have payments hanging over your head every month when you're not making any money.

The reality is that no one is going to give you the money because you want it or have a good idea. That's just not how banks give out money to the average joe. You could ask family or friends but that can ruin relationships. Family and friends don't have realistic expectations. They expect you to be profitable within weeks, and experience massive growth the first year. When that doesn't happen, relationships go sour.

You also appreciate it more and make wiser decisions about spending when you're taking 100% of the risk. When you start slowly based on what you can afford, you learn much more than if you get all the money dumped on your at once. You're also more driven and dedicated when it's all your money and all your risk.

$30k-$50k is a decent amount to get into something. Maybe not something that requires a location and staff, but certainly enough to start a home based business.

I, and most of the old timers around here started with nothing. I know people hate hearing "back in my day" stories, but it's true. I had no money, and no way to get it. I started with an old Compaq Presario computer, and knew nothing about marketing, SEO, or anything. Yep, lots of Ramen noodles, late fees on bills, temporary utility cut offs, and so on...but in my case (at the time) I had no other options than to make it work.

The advice "Don't quit your day job" is probably the #1 thing in this thread.

[g.geramo@web.de]

The advice "Don't quit your day job" is probably the #1 thing in this thread.

Out of all advices you got on here this one´s the most important one

[Wash & Dry]

I've never sank over $1500 in to a start up business. Every business I've ever had has been a start up. 90% of them turned a profit. My best business ever so far I started with $3.17 and it made me millions!! My after retirement business that I have now, I started with $150 and it makes me a taxable income of $75,000. It could do way more if I wanted more workers. I like keeping my dollars close to home with papa. The less you sink in to a business, the faster it turns a profit. I don't think I could be persuaded in to sinking $30k in to a business.... not even $10k! That's just crazy!! I'm not a risk taker when it comes to money.

[g.geramo@web.de]

I also think, that if you have the money to overgo these first, hard steps you should do it, because you can focus on the main business. But remember that youll learn the most about business owning in the first steps.

[Fulcrum]

The less you sink in to a business, the faster it turns a profit. I don't think I could be persuaded in to sinking $30k in to a business.... not even $10k! That's just crazy!! I'm not a risk taker when it comes to money.

Although this line of thinking has worked for you, it's the exception and not the rule. With ever changing technology, and employers having their right stripped away and being given to the employees, the only way to stay competitive is to spend money and keep fairly high level of tech on the floor.

[turboguy]

The amount of money you need to invest depends a lot on the kind of business. There are businesses that can be started cheaply and many that can not. I started my manufacturing business with a few thousand dollars. We have reinvested hundreds of thousands. I most likely will be expanding our facility this year and investing more hundreds of thousands. I do think watching costs and keeping expenses as low as you can is a good move. We watch every nickel. My wife is a real tightwad and does our accounting. I can remember her having me call the credit card company over a 50 cent charge that she felt was no proper. They did take the 50 cents off. She makes sure I turn the heat down at night in the office and that we don't leave lights on in a room we are not using.

[businessexpert]

I just did a video on how you should set up your business. LLC or Sole Pro https://youtu.be/Z8TortmLy4I