NA- buying a business

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C3flyer

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C3flyer
Anyone done it?
In the past I owned and operated a welding and fabrication shop... Learned a lot. Made some mistakes ended up changing directions and going back to work. Fast forward I have the entrepreneurial itch again and am looking to buy a business as opposed to starting from scratch. I have reached out to a few by cold calling. Inquired on a few listings from biz buy sell. Nothing has stuck yet.
So, anyone have any wisdom? Stories? I'll even settle for some jokes
 
I know finding something won't happen overnight. But trying to time the bottom will probably have me chasing my tail
 
TCABM said:
Do you want to buy a business or buy a job?
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Good question. I owned a job in the past... And it wasn't a good one.
I'm not opposed to working in my business but I do know the benefits of being able to pull yourself out
 
I was just under contract for one and the seller backed out. I too am looking for the people ready to retire. If anybody has a service business they want to sell hit me up. I’m primed and ready.
 
Be sure to include in the sales contract that you get your down payment back, your fault, their fault, nobodies fault, everyones fault if the deal falls apart.
 
simtech said:
I was just under contract for one and the seller backed out. I too am looking for the people ready to retire. If anybody has a service business they want to sell hit me up. I’m primed and ready.
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What’s your budget?
 
Is buying an existing business rather than starting one up a hard requirement, or just a preference?

Have you (or would you) considered franchises? You can find a franchise in just about any business sector. There are pros and cons of course, but running a small business by yourself is HARD. At least a franchise gives you a decent business plan and other resources.
 
I have started and ran a small business in the past. I know it's not always s fun.
Not particularly interested in a franchise at the moment
JOhnH said:
Is buying an existing business rather than starting one up a hard requirement, or just a preference?

Have you (or would you) considered franchises? You can find a franchise in just about any business sector. There are pros and cons of course, but running a small business by yourself is HARD. At least a franchise gives you a decent business plan and other resources.
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Try and negotiate a transition period overlap with the current owner as part of the deal.

If the owner has client or employee relationships going back years or decades, don't expect that those loyalties and goodwill are included in the purchase price of the business. They're not. You've gotta earn em, and having the person there to assist in handing it off to you will likely help.
 
AvNavCom said:
I'd probably wait for the economy to fully crash, then buy something for pennies on the dollar. Assuming you can wait a year.
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Now is the time to buy a marina. When the economy crashes, you take ownership of boats for which the storage isn't paid. The you have a bunch of boats and life is good.
 
C3flyer said:
Anyone done it?
In the past I owned and operated a welding and fabrication shop... Learned a lot. Made some mistakes ended up changing directions and going back to work. Fast forward I have the entrepreneurial itch again and am looking to buy a business as opposed to starting from scratch. I have reached out to a few by cold calling. Inquired on a few listings from biz buy sell. Nothing has stuck yet.
So, anyone have any wisdom? Stories? I'll even settle for some jokes
Click to expand...
As the owner of a welding and fab shop... I find it interesting when I get calls about selling. I'm not interested. But whats interesting is the people calling. Without a background in the industry and being firmly immersed, I find it hard to believe how someone can have success. So much of the profit and valuation in this business is that tribal knowledge you're buying out. Someone wants a railing, but they want it quoted for steel and stainless. Well, stainless material might be 3 times as expensive. But what about labor? Probably 5x the labor for a stainless rail. Super easy to make that stainless rail look like crap. So much care has to be taken to prevent shop contamination. Plus you're going to tig it to make it look good. How are you going to keep it from bowing since stainless is such a poor thermal conductor. Real easy to lose your arse.

I know a competitor sold out. All the skilled guys left because they didn't respect the new owner and he didn't know how to do what guys in the shop were doing.


C3flyer said:
Good question. I owned a job in the past... And it wasn't a good one.
I'm not opposed to working in my business but I do know the benefits of being able to pull yourself out
Click to expand...
This bugs me. It feels like you want to buy a business and reap the benefits. It just doesn't work like that. At least not in my industry. I thoroughly enjoy running a crew and problem solving. Figuring out how to become more efficient. What's the next capital investment. What's gonna break. I hate when things break. But I do get sick pleasure being able to fix the 24,000 lb 1947 Cincinnati shear.

Point is, it's harder owning a small business. It can be very rewarding. But dammit it's harder than a regular job. It's not just numbers. And it's not just doing a thing. It's everything.
 
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I am in the process of buying one and also helped some of my clients with their acquisition of businesses. It’s a drag. Most brokers and owners aren’t very open about issues. It’s like buying a plane but 10x worse. Some will simply hide issues by not disclosing them, others will outright lie hoping you won’t find it during due diligence. So, needless to say, due diligence needs to be thorough!!! Also, as already mentioned above, most “businesses for sale” are really “jobs for sale”. What is your budget and what is your time budget e.g. do you want to run the business full time? One thing to also keep in mind is, buying a business is pretty much always a buyer’s market. Of all the businesses you see for sale right now, only about 20-30% will sell. The remaining ones will simply shut down. Nearly every single business you see for sale right now is also vastly overpriced. Six months ago, I looked at a flower shop, priced twice as high as it should be priced at, no matter which valuation method I used. Business is still for sale. I told the broker to call me when the owner stops being delusional. Long story short, in most cases, don’t even think about paying asking price. Business valuations are pure math.
 
Racerx said:
As the owner of a welding and fab shop... I find it interesting when I get calls about selling. I'm not interested. But whats interesting is the people calling. Without a background in the industry and being firmly immersed, I find it hard to believe how someone can have success. So much of the profit and valuation in this business is that tribal knowledge you're buying out. Someone wants a railing, but they want it quoted for steel and stainless. Well, stainless material might be 3 times as expensive. But what about labor? Probably 5x the labor for a stainless rail. Super easy to make that stainless rail look like crap. So much care has to be taken to prevent shop contamination. Plus you're going to tig it to make it look good. How are you going to keep it from bowing since stainless is such a poor thermal conductor. Real easy to lose your arse.

I know a competitor sold out. All the skilled guys left because they didn't respect the new owner and he didn't know how to do what guys in the shop were doing.



This bugs me. It feels like you want to buy a business and reap the benefits. It just doesn't work like that. At least not in my industry. I thoroughly enjoy running a crew and problem solving. Figuring out how to become more efficient. What's the next capital investment. What's gonna break. I hate when things break. But I do get sick pleasure being able to fix the 24,000 lb 1947 Cincinnati shear.

Point is, it's harder owning a small business. It can be very rewarding. But dammit it's harder than a regular job. It's not just numbers. And it's not just doing a thing. It's everything.
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All fair.
I have seen the same thing. Anything I would consider is something that matches my skills and interests. And I have been on the other end. New guy comes in. Doesn't really have a clue.

Let me clear the rest up. We are in the same industry. I started my first business too soon. I was young and didn't know what I didn't know. I couldn't keep myself out of the shop. I enjoyed building stuff. I needed to be more focused on building the business at that time. And have been "there" when you have an 18 wheeler load of steel being delivered... And the forklift won't start. Towards the end I was working 7 days a week. Most days 12+ hours.... And didn't have much to show for it. So I owned (or it owned me) a crappy job. All my own fault. No regrets. Glad I did it. Learned a lot.
I fully intend to work in any business I own but I do think it's a good idea to keep your exit in mind. Even if you don't intend on retiring selling etc. Lots of the business I have looked at didn't. and probably won't sell.
 
T
Chrisgoesflying said:
I am in the process of buying one and also helped some of my clients with their acquisition of businesses. It’s a drag. Most brokers and owners aren’t very open about issues. It’s like buying a plane but 10x worse. Some will simply hide issues by not disclosing them, others will outright lie hoping you won’t find it during due diligence. So, needless to say, due diligence needs to be thorough!!! Also, as already mentioned above, most “businesses for sale” are really “jobs for sale”. What is your budget and what is your time budget e.g. do you want to run the business full time? One thing to also keep in mind is, buying a business is pretty much always a buyer’s market. Of all the businesses you see for sale right now, only about 20-30% will sell. The remaining ones will simply shut down. Nearly every single business you see for sale right now is also vastly overpriced. Six months ago, I looked at a flower shop, priced twice as high as it should be priced at, no matter which valuation method I used. Business is still for sale. I told the broker to call me when the owner stops being delusional. Long story short, in most cases, don’t even think about paying asking price. Business valuations are pure math.
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I want to run the business full time and top of my budget would be 2mil
Sending you a pm
 
Racerx said:
.....So much of the profit and valuation in this business is that tribal knowledge you're buying out. .......


.....Point is, it's harder owning a small business. It can be very rewarding. But dammit it's harder than a regular job. It's not just numbers. And it's not just doing a thing. It's everything.
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These are facts. The tribal knowledge is important in IT businesses too

And it is hard. I tell people the best part of life after selling my last company is being able to go to the bathroom without my cell phone. As an owner, you get zero time off. But yeah, not having a boss is pretty good too.

Chrisgoesflying said:
Business valuations are pure math.
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They most definitely are, especially if a bank is involved. The problem is many sellers want their sweat equity back, and that has no value to a buyer.
C3flyer said:
I fully intend to work in any business I own but I do think it's a good idea to keep your exit in mind. Even if you don't intend on retiring selling etc. Lots of the business I have looked at didn't. and probably won't sell.
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The exit plan is an essential element of an acquisition plan. Some businesses can have great cash flow, but no equity value. No problem owning a cash flow business but don't expect to get much selling the platform at exit. For example, some of the value may be in the sellers network, this is a negative to most buyers since it will follow the seller wherever they go.
 
What are you looking to buy in a business vs what do you want to bring to the business?

For example, when you owned a job, you built experience running a fab shop. What did you do well? Were you always finding ways to improve quality? Cut costs? Scale deliveries? If so would buying a company with a good management structure and sales pipeline that needs some investment in quality and product delivery be a good match?

What have you done since you stepped away from your last business? What went wrong last time? Why will this time be different?

The biggest advantage to buying a small business is that you can step in and improve it. If you aren't willing to do that, just buy ETFs. If you are willing to do that, focus on what you can bring to the business you buy and work from there. What is a good buy for a Management Consultant is likely a terrible buy for an Electronics Engineer.
 
Coming back to close the loop...
I found what I thought was a good match off market back in November. I contacted the owner and timing was right. We both matched what the other was looking for. We closed at the end of Feb. I am now an OEM of specialty concrete equipment!
 
AvNavCom said:
I'd probably wait for the economy to fully crash, then buy something for pennies on the dollar. Assuming you can wait a year.
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Wise words. It seems quite likely that a major economic downturn is plausible. Foreclosures are up. Repossessions are up. Layoffs up. Growth outside of govt., is at a standstill in most industries. Credit card delinquency is up as are the balances. Structural damage done to multiple oil production facilities, which won't be cured overnight. "AI" companies are not profitable and NVDA can only recirculate the cash for so long. Seems like a lot of reasons to push pause on buying an asset based business unless someone is making you an offer you cannot refuse. Best of luck to you!
 
C3flyer said:
I have had A boat. I don't see how having a bunch is a good! One is one too many
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A boat is a hole in the water to throw money.

Our GenAv thingys are aero-NAUTICAL. QED.
 
Chrisgoesflying said:
I am in the process of buying one and also helped some of my clients with their acquisition of businesses. It’s a drag. Most brokers and owners aren’t very open about issues. It’s like buying a plane but 10x worse. Some will simply hide issues by not disclosing them, others will outright lie hoping you won’t find it during due diligence. So, needless to say, due diligence needs to be thorough!!!
Click to expand...
That's a big reason why most business purchases (at least when the buyer is savvy and has a lawyer involved) are asset purchases, not company purchases. Even with honest full disclosure, the company can have unknown claims and debts the buyer doesn't want to buy along with everything else.
 
midlifeflyer said:
That's a big reason why most business purchases (at least when the buyer is savvy and has a lawyer involved) are asset purchases, not company purchases. Even with honest full disclosure, the company can have unknown claims and debts the buyer doesn't want to buy along with everything else.
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Depends on whether "good will" and the customer base involved in the purchase.
 
C3flyer said:
Coming back to close the loop...
I found what I thought was a good match off market back in November. I contacted the owner and timing was right. We both matched what the other was looking for. We closed at the end of Feb. I am now an OEM of specialty concrete equipment!
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Congrats! (And, of course, condolences! :rofl:)

I hope you can come close to the quality of life you’re shooting for.
 
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