Hey everyone, I would like to solicit some input from the current (and past) business owners here on the board.

I am in my early 50’s and finally in a position to consider buying a business. The goal would be to buy a business that I could run semi-absentee for the next 3 to 5 years (idea being I could double dip on income). After that I would quit my current job and work the business full time for the next 5 or so years and then either let the kids take over the business (or sell it) and my wife and I could retire.

We are currently just starting our research and investigation on what businesses look interesting to us as well as how to go about buying an existing business. We are not afraid to work hard and put in hours if it will help us get ahead financially but want to go into this with our eyes wide open as best as we can. At this point we know we are not interested in owning a restaurant but that is as far as we have gotten on narrowing things down.

I am looking for any advise from the business owners on the board that you would be willing to share about owning/operating or getting into a business.... the good, the bad, and the ugly. I am also open to hearing about recommendations on the types of business to consider as well as ones to stay away from.

I have friends who own local businesses so I will be talking to them as well but I figured I would post this here on the board as I know there are a lot of people who belong to the board that have various backgrounds and experience and would be a good place to get a variety of different inputs.

-Thanks

I've been in business since 1984 - various types but all automotive-related.

My old business partner (23 years my senior) told me a business rule he went by: never get involved in a business you know nothing about.

Rule #2 of his: find something you love to do or have a passion for, & figure out a way to make money doing it.

Good luck.

And Rule #3: "If you want to ruin your hobby, make a living out of it" DAMHIK

At your age, I’d only entertain something that your completely passionate about. Don’t have a passion? Then, a business may not be the best decision.

I too think it should be sort of a passion BUT I know a few guys that have businesses that do well and there is NO WAY they are passionate about roofing or landscaping or industrial automation. All have done VERY WELL. Industrial Automation guy has a $15M business. Landscaping guy has a $30M business and roofing guy probably a $5M business.

I have a young friend I mentored. He actually gave me a book about how you SHOULDNT be passionate about what you do in your business. for example a baker. If you grow to any scale you wont be mixing the batter anymore. You'll be doing hiring, payroll, taxes, purchasing. If you grow to the point where you have people doing that you'll be even more removed. My younger friend, now in his 40's has over 100 employees and just bought an 80,000ft 5 story office building and has 7 satellite offices in multiple countries so he has "some" idea.

I SAY DO IT. WISH I HAD SOONER.

I have owned and run a successful classic car repair and restoration business for ~ 25 years and am about ready to hang it up.
I am done with employees PERIOD!!! Everyone of them that was here longer than a year cost me financially and some emotionally.
I had the silly idea that if you paid them well, provided a comfortable work environment, took care of their needs (tires, down payments and other things), and offer a secure future that they would respect you and reciprocate.
Noting could be further from the truth. I have scars on my back that will never go away. One was a close blood relative that I employed for 15 or so years and probably got me for close to 100K. Another employee about the same.
The current generation feels they are entitled and you should be grateful if they even show up semi regularly
So:
Rule #1. With customers, Do everything in writing and be fairly explicit. Emails are great and admissible if needed. A pocket recorder is also great for reminding them what they authorized / asked for/committed to.
Rule #2. Do not treat your employees as family or friends.
Rule #3.Their problems are not yours. (employees or customers)
Rule #4. If a customer whines about the estimate, politely show them the door as they will whine A LOT LOUDER on the way out.
Rule #5. Try to screen the customers by talking with them a bit before committing. There are some slick willies out there that once you touch anything, they will then try to make you responsible for everything they can.
Rule #6. If they are in a hurry, again, politely show them the door
Rule #7. Make sure to take time for your wife, family and self.

I just spent the weekend at a BNB in an old farmhouse in rural Maryland. The owner had built an outdoor chapel and a reception hall for weddings. They are booked for the entire summer for weddings. The owner rents the facility to the wedding party, with their wedding planner handling all the catering, music and other details. My son is interested in doing this, but the initial cost to buy or build the facility is high.

Semi absentee for the next 3 to 5 years ... the employees will rob you blind !!!

As a owner manager you should be the first to come and the last to leave.,

Small RV parks are popping up all over around here. Seems like an easy to manage business, but the "buy in" (property, infrastructure, landscaping) might be high. Also you'd have to be in an area convenient to where RVers would want to stop. Just throwing it out there...

TJP: That’s sad to hear. But, I’m not surprised. Over the last year, employees are emboldened by the pandemic and social justice events. Monster.Com polled a group of people just recently & 95% of the employed are interested in quitting their jobs. With some politicians pushing a Universal Basic Income from the government and the constant bailouts, employees feel justified in leaving or doing what that want. In my opinion, older employees will be become more-valued due to their work ethic.

I have owned and run a successful classic car repair and restoration business for ~ 25 years and am about ready to hang it up.
I am done with employees PERIOD!!! Everyone of them that was here longer than a year cost me financially and some emotionally.
I had the silly idea that if you paid them well, provided a comfortable work environment, took care of their needs (tires, down payments and other things), and offer a secure future that they would respect you and reciprocate.
Noting could be further from the truth. I have scars on my back that will never go away. One was a close blood relative that I employed for 15 or so years and probably got me for close to 100K. Another employee about the same.
The current generation feels they are entitled and you should be grateful if they even show up semi regularly
So:
Rule #1. With customers, Do everything in writing and be fairly explicit. Emails are great and admissible if needed. A pocket recorder is also great for reminding them what they authorized / asked for/committed to.
Rule #2. Do not treat your employees as family or friends.
Rule #3.Their problems are not yours. (employees or customers)
Rule #4. If a customer whines about the estimate, politely show them the door as they will whine A LOT LOUDER on the way out.
Rule #5. Try to screen the customers by talking with them a bit before committing. There are some slick willies out there that once you touch anything, they will then try to make you responsible for everything they can.
Rule #6. If they are in a hurry, again, politely show them the door
Rule #7. Make sure to take time for your wife, family and self.



This is all true. They have no reason to care one lick what happens to you, one of mine would literally say out loud to me that I was making piles of money off him so it was fine for him to show up whenever he wanted, I tried to tell him on a regular basis how it was not true after all the expenses I had to pay, (he would spend 2 weeks rebuilding a transmission that should have been 2 day job and assume the $2000 I got from the customer was all profit) the day came for me to shut down and move out of town and instead he decided he wanted to buy the business from me, I sold it for the value of the equipment he wanted to keep and now cries how he isn't making anything. I supported 15 people when I was running it, he can't support 2. I have done everything I can to steer customers to keep going to him, spend time on the phone helping him diagnose stuff, let him be late on payments to me and he is not grateful at all. My new shop I have refused to hire anyone I don't care how busy I get my hours are set and if it takes a couple weeks to get around to someone's car so be it, I got 9 kids I don't want to miss them growing up. Every small business owner I have ever dealt with has the same problem no matter how nice or mean they are, loyalty is a thing of the past, I bent over backward for those guys, did everything for them I had wished my employers would have done for me and I got no love from them, better to not have employees. My bad back of 10 years has mysteriously gotten 90% better, my rumatoid arthritis is way better and I am just happy fixing cars by myself. I think everyone should have their own business with little to no employees and we would all get along better.

I own and operate a small engineering / industrial automation company based in Indiana. Previously, I worked as a design engineer and an Engineering Manager for an automation company before starting my business in 2014. That meant I had a few years of industry knowledge for the business model I was starting - although I do not do the exact same thing as when I was an employee for someone else. I started from scratch, zero customers, and zero products to sell.

Started the business in April 2014, and the trajectory went like this:
Year 1: lose a little money
Year 2: break even
Year 3: make a little profit
After that, pretty normal business for a single person company with extremely low overhead. Most years, I made 2-3x more than when I was an Engineering Manager employee. 2020 was tough in the cashflow department, but low overhead and myself as the only employee made it a little easier than other businesses had.

As far as growing the business, I am probably the biggest obstacle in my own way. I know that. I have also self-funded this business completely with the money it has generated - so taking out a loan or credit line to expand in some way seems scary to me. I am self-taught as far as running and owning a business. I know that limits the business as well.

I enjoy the freedom of doing this over working for other people. EVEN on the worst days / weeks/months / years, it is better! If that is a foreign concept to you - then having your own business might be a problem for you.

I am happy to elaborate more on the specifics of my business if you'd like to speak directly with me. PM me and i will give you my contact info.

Based on all this advice - I need an Ice Cream stand!

Some things are just less stress than others, I really enjoyed running a detail shop: customers were always happy and if it went bad after detailing they didn't come and blame us, they didn't bring you the car to get detailed if they didn't have the money. In the repair industry it always catches people by surprise, most never plan for a breakdown so they don't have the money to pay and begg you to take payments or don't pay for months blame you when the transmission goes out after you put in a new tailight... that part can get real old real fast but I do love working on cars (except fords)

The main question you need to ask yourself is do you want to own a Business or own a JOB.
If you have to be there for the day to day operations, or are doing the physical labor, you own a job and these businesses usually do not sell for much, no matter what you see on BizBuySell.com.
I sold my auto repair business in 2004 and the ONLY way I was able to sell it was to have systems in place where I did not need to be there for it to operate.
If you are wanting to own a BUSINESS then I highly recommend you read (and reread multiple times) the E Myth by Michael Gerber.
Also "follow your passion" when starting, or looking to buy a business is 100% the WORST ADVICE YOU CAN EVER GET. Yes I am typing in caps to make this point.
You have to create serious value for your customers and nobody gives a crap about your "passion".
I would also highly recommend looking up David C Barnett and taking his business buyers advantage course. He is probably the best business buying and selling coach I have ever seen.
Good luck

Before I started my welding shop 18 years ago, I talked with a lot of self employed people. Most of the stuff I learned way back then still applies today, maybe even more so then it did.
1) No employees! If you can't do it by yourself, you won't make it in the lean times. Hiring employees makes you a time manager, you manage the time they are suppose to be working, and you manage the time for you to secure work to keep them busy. If you hire employees, they need to produce income 2X what you are paying them, to break even.
2) A written contract on every job detailing everything you will do, the amount and time frame payments are to be made, and what happens if the payments are not made on time.
3) Get paid for any parts/ material your going to need up front, and use that money to buy the stuff you are going to need. If everything turns to crap, at least you don't have a pile of parts to pay for as well as loosing all the labor.
4) If whatever you are doing is going to take more then 2 weeks to complete, set up a weekly or biweekly payment schedule for the labor. If the customer gets behind on the payment schedule, all work stops, and a predetermined plan takes over.
5) Keep track of your hours on each job, use a time clock to stamp each start and stop time, document what was done every hour during that time. Picture proof is helpful if you go to court.
6) Finance as little as you can, monthly payments suck for a new business. It takes 1-3 years before the business can carry itself, and another 2-3 years before it will generate a minimum living wage for you. Don't spend more money then you make!
7) With the current tax laws, you might have some pretty nice stuff, but very little in cash reserves. The government (local, state & fed) are really good at taking cash reserves away from you.
8) Hire a good accountant.
9) Talk with a local to you lawyer to find out everything you need to legally have up front for your business to open, and what you will need to keep functioning in the future for the business you go into.
10) Set your business hours, and stick with them. Anything before or after hours is extra cost, no exceptions. If someone has an emergency and needs you after (or before) hours, they should expect to pay a premium.
11) There should be no discounts for family or friends! Your expenses don't change while you work on their stuff. Family and friends should understand that.
12) Set your hourly rate competitive with like businesses in your area, not cheaper nor more expensive. Be sure to charge for each hour you work on something, or charge according to a time rate for the job you are doing. If you can't make money on the time rate, you either need to improve your performance, or look into ways to improve your time.
13) If you don't enjoy what you are doing, why would you want all the hassles?
14) if you sell your business, DO NOT become the bank

Sorry to be negative. My personal opinion is it's a terrible time to try this. The current economic environment is a crap shoot at best. Employees will without a doubt be your biggest challenge. Every single business owner I talk with during the week cannot find or keep decent help. Turnover is incredible and getting worse.

After employees you'll have health care costs, taxes, regulation compliance, business insurance, workers comp insurance, trying to find a banker that understands something about your business and won't be moving on in 6 months, utilities, assessments, etc. SBA loans can be a real treat. If you're hoping to not be directly involved, you're completely reliant on someone else to run the business. Can you rely on them? How thoroughly can you vet them before closing the deal? What happens if that person decides to jump ship?

If you do look at a business, take great care to go over their balance sheet in excruciating detail. Debt load can be especially bad after the past 18 months, cash flow can be made to look much better than it really is. How strong is their business outlook? What's their competition doing? New regulations looming? I would always assume there's a good reason the owner is trying to sell and it's likely not the reason they provide you.

To 1972 Cuda: Thank you very much for acknowledging
To Hot Rod Dave; Couldn't agree more and that is EXACTLY where I am going. I have one car left to "clean up" from the last employee who again, left me high and dry with half finished project he committed to finishing before leaving. After that, it's pick and choose time. I will give existing / previous customers priority but if anyone is in a hurry, go someplace else. My days of stressing and caring about customers and employees problems are DONE!!!! The last 3.5 years have been a real struggle at times, to an extent I blame myself for allowing it but did so because I trusted, cared and believed.
But in the end they are the ones that lost as they did not realize what I offered them. The most painful part was realizing I lost nothing as I never had it to begin with. And thanks

There are a few businesses that might work for a person in your position. Self storage might be a good fit, especially if there is a house on site that you can live in. Not a super romantic place to live but it is a decent business with steady cash flow and billing is all automatic. Another option is some sort of personal service type of business but those usually require some technical skill. I know people who do book keeping out of their homes and make good money. Small businesses will pay $50 an hour for someone to do their books, payroll, etc. and you can work from a home office. I have friends who have become investment advisers and done well. Real estate is another gig that some people really take to and doesn't require a huge investment to get into. A small locksmith business could make money and wouldn't be too physically challenging. Selling cars can be a nice job for a semi-retired car guy but I don't think I'd want to buy a dealership.

There are some important factors that you need to think about besides just how much money you have and what your cash flow requirements are. Small businesses run on personal relationships so you need to be honest with yourself about your interpersonal skills. If you don't love to meet and greet strangers all day long then stay out of any sort of retail business. An introvert will go broke very quickly in a sales type environment. If you're an introvert then focus on something you can do remotely such as PC programming, PC repair, etc. If you love sales and people then get a business where you are meeting people all day long like retail store or a restaurant.

My dad lost his job in mid-life so he went and bought an upholstery shop from a guy who was retiring. My dad didn't know anything about upholstery but he was lucky to inherit a really good employee who taught him the business and helped him make money. My dad then went on to buy a paint store and he did okay with that. My dad loved to talk to people and he treated everyone who came in the store as an old friend so he was successful even though he didn't know much about the business before he bought it. But that trick won't work for many people. Some people just hate talking to strangers and that attitude will sink a store in a heartbeat.

Good luck but you need to figure this one out yourself. You (or your wife) is the only one who knows what you want to do and what you would be good at.

I think I’d take my money and invest it in the stock market. You can make way more with less trouble, control the taxes with how you go about it, and not be getting into uncharted waters late in life. You can get by with little understanding of it if you just stick with a few etfs. You need to do something with a business that you understand and the business will not work out if you are depending on other people to run it.

I bailed on landlording after 20 years. Growing up in a family that did a lot of that, I started already having the lay of the land. It got steadily worse as society has crumbled. The lower end of the scale has gotten so disgusting and entitled it’s hard to describe how hard it is to get a good tenant. Even ones that start good hit a wall after 18-24 months. My right hand guy didn’t believe me until after a few years of seeing it play out. Something just snaps inside people at that interval. He eventually started having failing health and without my buddy I said enough is enough.

Thanks everyone for all the input on this. It has been enjoyable to read all your comments and hear the different perspectives on this topic.

My personal feeling is that you don’t have to be passionate about what the business does when it comes to owning/operating a business. I think you need to be interested in what the business does but it does not have to be your passion as the real purpose of the business is to be profitable and make you money. 71TA provided some examples of associates who were not passionate about what their business does but I bet that all of those people are passionate that their business is successful and makes them money.

I am thinking semi-absentee because I am not looking to buy a job (I already have one of those). My goal is to increase my income, I only have so many hours in the day to make money and the only way to increase my earning potential is to have someone else making money for me during those same hours. I have first hand experience that employees can be difficult (I have managed a number of people over my career and have to let some of them go for various reasons) so I am aware and understand that whoever is running the business when I am not there needs to be trustworthy (I have heard some horror stories on this from my friends who own businesses). I acknowledge the employees part can be a real challenge if you don’t have the right people working for you and can potentially sink the whole business plan and take a toll on you mentally and financially as TJP and HotRodDave pointed out with their experiences.

Challenger Steve, thanks for the book recommendation as well as the business buyers course, I will look into those.

Poorboy, thanks for the input, you have some good advice in there.

Peabodyracing, thanks for the candid feedback. I suspect you and I think a lot alike about things. I say this based upon the points that you listed, these are all things I have been thinking a lot about as I have been considering buying a business and you summed them up well especially your comments on the balance sheet, cash flow, and the real reason the owner is selling the business. Also, I acknowledge your comment about this not being the best time to start a business. As I have watched what is going on economically in this country I too feel that things are on shaky ground right now. The good news is that I am just in the first phase of this process so I am taking my time and doing research and talking to people and I am in no rush to jump into purchasing something. In order for me to pull the trigger on buying something it will have to be right for me and I will also have to feel confident about the macro environment in this country (both financially and politically) before I dive in.

AndyF, thanks for your comments especially your advise on being honest with one’s interpersonal skills. I work in technical sales so I definitely appreciate where you are coming from on this. Also, thanks for sharing the story about your Dad.

A bunch of great advice has already been offered. A few more thoughts:

Consider the state of your health. A lot of guys start to slow down a bit sometime in their 50's. They don't have the energy and stamina they had when they were younger. Owning a business that requires hard, physical labor could become a challenge. It would also be wise to consider how much stress the business will add to your life. Sometimes our ability to handle stress declines with our advancing years. These factors do NOT affect everyone equally. I know a farmer who is 80 years of age. He is still out doing heavy physical labor every day! He can out work many guys half his age. He loves farming and plan to stay at it as long as he can! He is an exceptional man!

If you want a business that does not require you to daily manage it, consider a business that requires a capital investment. For example, I knew a guy years ago that owned some expensive, specialized equipment. He attempted to sell the equipment, but the market for it was very small and he couldn't find an interested buyer. Since he couldn't sell the equipment, He rented it to another business owner. This other business owner did NOT have the upfront investment to buy the equipment to enter the business. My friend was making some money with very little time or effort invested. Opportunities like this are not real common, but can be found at times. If you consider this option, get some advice on how to protect your investment.

Thanks for asking this question. I've been considering opening a business again. Having employees today sounds like it is even worse than it was a few decades back!!

It's a new generation out there, and the above is likely to be your biggest challenge. keep us posted

I've worked for small businesses where the owner is stuck in hell working 6-7 days a week and long hours doing all the grunt work themselves as they can't get the right group of employees together to make anything work right.

Hiring the wrong type of people and putting them in the wrong positions for their personality, or skillsets. Grumpy people as the first point of contact = bad idea.

Trying to be friends with below average employees that walk all over them anyways. Give them a raise and more paid vacation time hoping to straighten them out, and they still behave the same as before.

Not valuing the actual good employees that do make the place work so they wander off and find a better place at usually the worst time possible. Turnovers can be a disaster and can lead to good people quitting when they get screwed too.


I've also worked for small business that run pretty well, and the owner only shows up to sign checks and to check in on things a few times a week so it's possible.

Some of the under 35 crowd today want a lot of paid time off right up front and "work flexibility" meaning they can leave at the drop of the hat to go wherever with their friends for an impromptu 4 day weekend. They tend not to ask and rather just do it and call in to tell the manager they have left town and will be back "later". These types see jobs as temporary gigs so they tend to not really care about the job enough to worry about losing it.

I work for 3 different telephone companies for 33 yrs while owning and operating my part time engine building and racing as much as I could.
I started off as a apprentice lineman and transferred into installation and repair after 15 months on the line crews due to getting bore with nothing new on the job, I had learned as much as I could on the line crews
I quit the original company and hired on with another telephone company 70 miles away, that was one of the best decisions I made while working in the business.
I put in and got promoted into supervision in 1980 and learn leading people is a skill that can be learned but you need to know your employees and how to inspire them to achieve excellence on their own on a daily basis, pride needs to be use to inspire them
I ended up becoming the problem solver for our area, I would fix one group and then be transfer to another work area and help them, that was very satisfying
No two people are exactly alike so good luck on your decisions
You need to be able to get them to want to help you and your business succeed
Ask them to help you make their work inviorment, (SP) work place better, safer and more productive

You are a mad man.
God bless, brother.

I have been mocked for asking
“What is the Wisdom of Moparts on...”
in past posts, but the replies in this post confirm that there is wisdom.

It is a shame that Infolinks has driven away many previous members with specialized wisdom.

Take everything said above and multiply it by at least 3 for employees to do caregiving for the elderly.

You probably cannot imagine how bad things are on the late night shifts in nursing homes.

When I was in a specialized facility recovering from a triple bypass that went sideways the night shift staff was beyond horrible. If spending time with a loved one who is in one of the specialized facilities, if possible do so at night.

I agree...it is a bad time to stick your neck out. AND avoid having to have employees. AND avoid things you know nothing about. AND keep overhead low.

If you have steady employment and/or significant savings, and could take some risk and begin small/part-time or use it for supplemental income, that would be much less stressful.

Did I mention that you should avoid needing to have employees?

I know of people who got into ebay, small online businesses, etc, and are making out. They found the right products that they could mark way up. And didn't try to be the next Amazon. Also wholesaling to other businesses and avoiding having to deal with the end users. Dealing with the general public is a good way to become an alcoholic.

I know a guy who has a large plumbing business. Was doing really well. Got into the plumbing supply business. Now making bank, has a large facility full of pipe and parts. Sells to himself and all the other plumbers. Same guy has a restaurant. Bought a farm. Raises his own beef, eggs, etc. Sells to other restaurants. He has it figured out.

Buying an existing business. Need lawyers and accountants to look at it closely. I know people who spent big money on a pig with lipstick on.

"The goal would be to buy a business that I could run semi-absentee for the next 3 to 5 years"

Not sure how persistent you are, but it should not take that long to see the error of your ways.

100%
There have been MANY studies done that show the further the owner is away from day to day operations the chances of things going downhill multiply exponentially.
Your only chance of possibly succeeding IMO would be to cut the top manager in with the intention of him buying you out in 5 or so years at a reduced cost. I would advise to do everything in writing and keep real tight control on the cash flow.