Buying a business might seem like an easy way to jump into something profitable. You avoid the years of figuring things out, like finding the right market, hiring a good team, and setting up systems. You might think you can just buy a business that’s already working and make improvements to it right away.
But sometimes, things don’t go as planned. You might realize the business isn’t making as much money as you thought. You could try different ways to grow it, but they might not work. Or, maybe you just don’t like the business anymore and don’t have an easy way to leave.
Has anyone found themselves in this situation? How did you get through it?
Just a quick reminder that this forum is for asking questions about starting, owning, and growing a small business. Please make sure your posts follow the forum rules. If your post goes against the rules, it might be removed or result in a temporary or permanent ban. If you have any concerns, please reach out to the forum moderators.
I haven’t bought a business myself, but I’ve sold businesses, consulted for many after they were bought, and worked at companies that were acquired. After being involved in around a dozen acquisitions, I honestly wouldn’t buy a small business again. A lot of small business owners don’t really get how valuations work. They expect to get paid for all the work and risk they’ve taken on, but that’s not how it works. A lot of businesses either close because the owner refuses to sell at a fair price or the new owner tanks it out of spite. Many small businesses also have terrible books, and the owners always say ‘next year will be better,’ but it’s often not true.
Another issue is that businesses often have these little quirks. For example, a customer might ask for a freebie, and the new owner doesn’t understand why it’s important to keep them happy. This can mess things up if the previous owner didn’t explain these details.
Also, keeping staff and clients is really tough. I know someone who sold their landscaping business, and as a customer, I switched to another guy because I liked the owner, not the company.
A lot of these small businesses are sold to people who think they’re escaping the 9-to-5 grind, but they end up working 80-hour weeks for very little money. The reality is, a lot of small business acquisitions end badly.
So, in short, I’m not a fan of buying small businesses. It’s very rare that things work out long-term.
I’m curious though, what’s the success rate of buying businesses? I think it might work if a larger company buys a smaller one and has the resources to make it work, but I agree that the small business market can be a tough place. I’ve bought a few small websites and things, but I’ve never gone into a big deal. I’m still on the lookout for the right opportunity, but it’s tough to predict what will succeed.
@Finnian
A lot of the acquisitions I dealt with were large companies buying smaller ones. In every single case, it would’ve been cheaper and easier for the large company to just open a new location instead of buying another business. A lot of the time, these big companies use acquisitions more for financial reasons, like tax strategies, rather than to actually grow the business.
I bought a competing business a few years ago. It wasn’t a full business, but just the equipment and customer list. Turns out, all the customers were paying way too little, so when I raised the prices, they all left. I ended up selling the customer list and learned a valuable lesson from it.