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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?
Peter
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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!"
JG
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