7thLetter

Should I buy an existing business?

18 posts in this topic

I have about $10K saved up, and I'm not exactly sure what I should do with it. I've been thinking of getting a loan to buy an existing business, or buy a 2 bedroom apt/condo/house, live in it, + rent it out. I'm also expecting to get another $10K next year from something, so that would leave me with over $20k.

Should I buy an existing business? What goes into it, what's required, who should I hire or get advice from, what should I know, etc.?

Could it potentially be making passive income, or would it be a full-time job doing 12+ hours a day?

I live in Canada by the way.


"Intellectual growth should commence at birth and cease only at death." - Albert Einstein

 

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Never buy an existing business ! You should really build something from the ground up. 

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There's no clear-cut definite best way. It always depends on the kind of deal you have on the table.

If you can get a great loan and purchase a great, profitable business at a good price, then yes, why not?

But also think about what YOU want to do. Would you buy any business if it was a good deal? - I wouldn't, because I know that running a business is though, especially when you're not particularly passionate about it.


Knowing is not enough. We must apply.
Willing is not enough. We must do. 

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Invest that money in yourself or survival needs if need be. Don't buy a business. If you want to start one, start it on your own. Although business isn't for most people and can be quite challenging. 

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For the most part if you decided on a business you wanted to buy you could just make your own version of that. If you are looking to buy into franchise, then be very careful and have a lawyer go over all of the stipulations and even then you could end up with nothing or have it terminated early. It sounds like you are wanting to just bring in some easier income seeing the options you want, so I would skip this business if you are not going to be willing to invest the time into it. Lots of investments available, but your knowledge, risk management,  and time horizon are things I don't know. 

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In practice it's hard to buy a decent existing business. People who are usually selling a business are doing it because the business is going downhill.

$10k is so little when it comes to investing.

It's pointless to buy a business you have zero experience with. You'll tank it. Running a business requires keen industry knowledge and experience. It makes sense to buy competitors in a field you're already deeply experienced in. But that's gonna cost you a lot more than $10k.

What condo you gonna buy with $10k?

$10k is basically good enough to start a small biz of your own. But this will require full time work.


"Be melting snow. Wash yourself of yourself." -- Rumi

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@Leo Gura you really think 10k is enough to start a biz ? Not trying to be a dream killer.

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5 hours ago, Leo Gura said:

$10k is so little when it comes to investing.

It's pointless to buy a business you have zero experience with. You'll tank it. Running a business requires keen industry knowledge and experience. It makes sense to buy competitors in a field you're already deeply experienced in. But that's gonna cost you a lot more than $10k.

What condo you gonna buy with $10k?

$10k is basically good enough to start a small biz of your own. But this will require full time work.

@Leo Gura Obviously can't buy a condo with $10k lol, but was thinking I'd get a mortgage and pay a 5-10% down payment.

Well what are my options? What could I do with $10k


"Intellectual growth should commence at birth and cease only at death." - Albert Einstein

 

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4 hours ago, K VIL said:

@Leo Gura you really think 10k is enough to start a biz ? Not trying to be a dream killer.

Of course it depends on what kind of biz you're trying to make. If you're starting a new car company you might need $5 billion.

But I started my first online biz for $2000-$4000.

1 hour ago, 7thLetter said:

@Leo Gura Obviously can't buy a condo with $10k lol, but was thinking I'd get a mortgage and pay a 5-10% down payment.

I don't know where you'll get a mortgage these days with 5-10% down. Those days are long gone. 20% is standard these days. And that mortgage will cost you an opening fee and 3-5% per year. You gonna make all that back from your dinky condo? Don't forget, a condo has expenses, utilities, property taxes, and association fees.

I would either save that money for a rainy day or invest some of it into building your skills so you can get a better job or start your own biz.

The best investment of money is in training.

But also you should have at least $10k-20k in saving just for emergencies and wiggle room. Don't be spending all your money. You need the wiggle room to change jobs, move cities, get needed healthcare, etc.


"Be melting snow. Wash yourself of yourself." -- Rumi

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@K VIL It's easier than ever to start a business in today's time, with basic social media marketing skills and enough drive, will and passion. 

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On 11/4/2019 at 10:29 PM, Leo Gura said:

In practice it's hard to buy a decent existing business. People who are usually selling a business are doing it because the business is going downhill.

$10k is so little when it comes to investing.

It's pointless to buy a business you have zero experience with. You'll tank it. Running a business requires keen industry knowledge and experience. It makes sense to buy competitors in a field you're already deeply experienced in. But that's gonna cost you a lot more than $10k.

What condo you gonna buy with $10k?

$10k is basically good enough to start a small biz of your own. But this will require full time work.

 This is great advice. Also, check out Empire Flippers (where people sell their Online Businesses and I will eventually do that one day) 

 You're better off starting something, 10k is certainly enough to get started with an online business like SMMA, Publishing or any of the other 100 options out there, look for one that appeals to you and you will be willing to put in hours upon hours, that's what I did and it's going well so far!

Back to the Empire Flippers point, 10k would maybe get you a Biz making $500 a month if you're lucky, so it's kinda pointless. If you had $1M inheritance and wanting some cashflow, yeah great idea. 

I know someone who made $6k/ Month on average and sold it for $110k on Empire Flippers, so if you're looking to make money your best option is finding something you're interested in and starting it from the ground up and (Potentially) selling it in the future, in your situation buying one realky isn't an option. 

 Like I said research your options, but don't just buy the first course you see on Amazon FBA, there's so many 'Gurus' out there who are excellent marketers but their products are far from excellent. 

 

Best of luck! 

P.S. You could easily turn 10k into a 2-3k a month business in 6 months or less if you worked extremely smart and hard, learned from people who actually want to help and actually take action which 99% of people don't do. 

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@7thLetter 10k is at what's needed for unexpected outgoings in a modern world. You should never have less than 10k.

If you thinking about kids, house etc you should tripple that.

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@Hsinav I will have times where I will spend all of my cash to build up my business. Has happened a few times in the last 6 months. I have some investments I could fall back on if needed and my situation could allow for some stuff to come up. Not always the easiest thing, but it's made some huge movements for me. I took my rent money for this money and put it into my business and I will likely have doubled almost tripled it by the time rent is actually due. Now it could have went less successful I have been playing with a new model for my business and it is starting to prove really stable, but I am taking risks to make this happen. Just this extra addition to my business could literally pay for all of my expenses every month and only cost me about a day or two of work. But it depends and I could even try to expand on it possibly. But so far so good and it took me risking my rent money a few times and this month I got pretty confident and put in a larger risk. 

I spent all of my money on some product I expect to possibly make a 30k+ return. Might not sound like a lot to many, but that is more than I made last year. And I could have this product all live and for sale within a couple months and just take in that profit over time. But it came at the costs of eating up ALL of my savings. Every last dime I had went into it and it set me back for several months. Now I am not saying I am just going to make 30k fast, but gradually and once I do the work it will just be in the background. 

It's nice having a big pile of cash, but your cash flow is really stunted. You have to keep the wheel turning in my experience. Money just sitting around is actually losing value. Now I would like to be back into savings again don't get me wrong. I could easily save some money this month, but I am going to take all of it and put it into business car insurance, which will be a write off as well and try to pay up 6 months for the best rate.  I am maxing out my business infrastructure and taking some risk since I can't get loan yet. And I spent money on forming my corporation and all my needed business licences etc this month. Yes, I do recommend savings of course. I could barrow some cash from my mom if things were really dire, but I don't like borrowing money at all. 

I can't say I recommend everyone do it like that. But maybe thing a little more into how you can get the wheel turning more for yourself. Or investing more of it. A huge issue with most people is that they will live above what they can actually afford. And like I said I do need more liquid cash especially for the business I am in it makes all the difference, but you have to start somewhere. 

Edited by Average Investor

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@Average Investor Where I live in Sweden, 90% of the small businesses closes in a couple of years or the owner have to work 80 h/week to keep it up, it's a form of wageslavery.

Very often just because they don't have the financial space to get around the corner that 10k would get them. If you living on the financial edge running a business you won't last long, you have to cancel potential rewarding meetings because your car crashed down etc.

With no money you won´t find the space that's needed for inspiration, because you'll be too caught up in the survival process of your company.

 

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1 hour ago, Average Investor said:

@Hsinav I hear you there. In my situation it's worked well. 10k might be what you need to have on hand. I could buy another car for a couple hundred dollars relatively fast and be on my way if needed. Just using my "extreme" to show the effectiveness of continually moving money. 

Thats good :) I would be careful though putting all in one basket. A successful poker player only uses 1-4 % of the bankroll, thats the only way to stay in (that business) business for +10 years. Others are very successful for 3 or 5 years.

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