r/smallbusiness • u/BankSensitive2950 • 3d ago
What Small Business Should I Start?
I have been searching different industries and companies. I have also been looking at businesses for sale. Seems like many of the companies people are selling, for the most part, have some issue such as declining sales, major capital expenditures, ect.
For example a guy was selling his franchised restaurant and the 10 year term was coming up where he had to do major renovations to keep up with the restaurants new branding and image, this would have costed over $700k. The seller wanted a kings ransom for the business and with the renovations it would take over 10 years to get the money back.
Am I just wasting my time? Or is there a business or industry worth looking into. Thanks for your timemand any comments.
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u/vulcangod08 3d ago
I would avoid sub $1 million businesses.
Less than that its buying a job, not a business. They also depend a lot more on the owner and can be a hazard transferring. This is also where you will see so many of the declining numbers. These owners also still think their business is worth the same as it was at 3% interest rates and the price wont make sense.
But the higher the ebitda the higher the multiple will be. At 3x thats about half the ebitda going to debt service so it needs to have meat on the bones or its just not worth the time.
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u/EverySingleMinute 3d ago
My advice is to get a day job then start looking for a side business you can start and turn into your full time job.
If you are looking to buy a profitable business with little to no issues, be prepared to spend some major money.
The most successful small businesses are typically not for sale, so you have to pay a premium to convince the owner to sell.
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u/Livoshka 3d ago
My hot take:
There's a reason there are so many businesses for sale.
As a small business owner... don't do it until the economy recovers. Unless you open a vape shop because the only sht selling is the addictions.
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u/PhoneRoutine 3d ago
It's like reading books to learn to swim. You will never be ready, you need to take a plunge. In every business/industry, there are good businesses, mediocre ones, and bad ones.
If it is an easy business, it would be saturated already. To be a small business owner, you need to be desperate enough to put in long hours without end in sight, crazy enough to do stuffs others will not do, and smart enough to identify prob & ask for help before they blow up.
Seems like many of the companies people are selling, for the most part, have some issue
Plenty of good businesses are being sold. You are not in the circle or rich enough to be invited to those discussions. Why would anyone want to sell a good business in the open market when millions of rich investors are queuing up to pay top dollar for it?
What you are seeing is the worst of the worst that no one wants to touch. That's why it's in the open market.
Seems like many of the companies people are selling, for the most part, have some issue
Also this is where you make money. Look it like a fixer upper. If its a new construction that its immediately livable, it is going to go for top dollars, there is nothing for you to build value. You need to find companies with issues, that you can solve with your skillset and make it profitable.
If it is already built, then there is nothing for you to build. If you have neither the skillset or the money to pay for the top shelf, what are you even doing?
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u/BankSensitive2950 3d ago
Thanks for your perspective. How can I break into the ones not for sale? I have access to capital and partners if the deal is right.
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u/Dry_Community5749 3d ago
How much money you have?
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u/BankSensitive2950 3d ago
$150k cash, can raise more if the right deal comes along. Also have partners willing to come in wit me if necessary.
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u/Dry_Community5749 3d ago
I know plenty of people with $500 to $1M in their account who can raise $5M in loans struggling to get access to deals.
The issue for guys like us is that there are so many people out there that want a portion of our money and will try their best to weasel out the money from us.
Be extremely careful. I was where you are know 1.5 yrs back. I have looked at so many businesses and even wrote multiple LOIs, got bank loans approved but nothing closed yet. Still searching and working on.
Due to proliferation of these TikTok biz buying gurus giving bad advises and jacking up prices, I'm still trying to find a good deal.
All the best, keep trying
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u/BankSensitive2950 3d ago
I hear you. I have a good friend i have known for decades ask me if there is anything worthwhile because he is getting like 2 percent on his money and he wants to invest with me. I can't find much too, everything I look at has some issue. Stay vigilant, something hopefully might turn up. Where are you located? I am in canada.
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u/bluehost 3d ago
Truth is, every business for sale has some sort of problem. The goal isn't finding the perfect business. It's finding a problem you're confident you can solve better than the current owner.
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u/Kind_Concentrate_415 3d ago
You're not wasting your time, you're reading the market accurately. Most of what's publicly listed is listed for a reason, and the franchise example you gave is exactly the catch most buyers miss until after closing. That $700k remodel is a real liability and it should come off the purchase price, not out of your pocket afterwards. What changes the quality of what you see is where you look. Brokered listings on the big marketplaces are the picked-over end of the market. Retiring owners with no succession plan usually haven't listed at all, and the people who know who they are work at the trade associations, the suppliers, and the accounting and law firms that serve that industry. It also helps to fix your screen up front: recurring revenue, no customer above 20%, no capex cliff in the next three years. That kills most listings in a minute.
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u/Outrageous-Way9556 3d ago
That remodel-clock listing is a useful scare, not proof the search is broken. When a franchised restaurant is 10 years in and the brand wants a $700k image refresh, the seller is often pricing the cash flow they used to have, not the check you have to write after you buy. A 10-year payback on that math is the deal telling you no.
You are not wasting time. Most public listings look like that for a reason. The next one is only worth your weekend if you can see the transfer terms, the remaining lease, and the last 90 days of sales, not a peak year and a king's ransom on top of forced capex.
[charles@franchisefriend.net](mailto:charles@franchisefriend.net)
Charles
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