Originally Posted by Peter76
This question is for the John Galt-types:
I've always toyed with the idea of buying an existing business (mainly because I feel that I have the ability to do enough tweaking to bump up the margins a bit and help make a business more profitable than the previous owners). I know JG and a few others may have bought and/or sold existing businesses.
So, I was looking for advice on how to go about looking for one to buy. I know there are business brokers out there, and I'll try looking at a few. But what were your experiences like? How did you happen to be in the right place at the right time? Any warnings/advice to give to those who are insane daring enough to try and follow in your footsteps?
There is big money to be made, but you will need luck and cojones.
This is only my story, no recommendations......................
I looked and looked and looked for a business to buy. Many many
near misses. I also worked with very many business brokers.
My experience was not much different from looking on my own.
This process covered decades; literally. My theory was that it is
a lot less risky to buy an existing business than doing a start-up.
This proved to be correct. In fact, what I really wanted was a
business which could be liquidated and still yield a profit even if
things didn't work out (I'm very risk-averse). Now, these businesses
are hard to find, but it can be done and in fact my last purchase
worked out pretty much as envisioned, i.e. I ran it for 3.5 years
and then shut it down. After that, I liquidated at my leisure over about 5 years. I recall the previous owner told me (after closing) that he thought
I could liquidate immediately and make money. I told him I agreed
but that was not why I bought the company (it was only a back-up plan).
It so happened that I knew this guy and just happened to be there
when he was thinking of selling. He was a sharp guy and recognized
that he could just liquidate it. I think his ego prevented it, whereas, it
was just business to me. I had no emotional attachments to prevent
taking the most profitable path. Now, I think I could have found a business
to fit my goals if I worked hard enough at the search. But, I had a lot of distractions at the time. The only business I would start from scratch today
(assuming I had the energy and desire - I have neither) is hands-on real estate investing. But, that's because I have extensive experience. Buying or starting any business without heavy background is asking for trouble,
unless you know how (and are willing) to sell it off if things go south.
I know guys who got rich just by buying "dogs" and castoffs. In the big leagues they call them bottom feeders. I believe that they entered each deal with the same idea I had, i.e. if things don't go well I can always liquidate and get my money out. Another way to say "Make your money when you buy!"