There is this small business in my area that is for sale for ~$1.2 Million. I know that the business is a bit struggling (and I know the reasons). As a customer in the sector, I know that there is demand and I have some ideas to increase the gross revenue and the profit margins. This is an absentee-run business with ~12 employees and a manager.

I have a full time job (in a different sector) and I want to keep it. I have never run a business but I have successfully managed big long-running projects. I have a CS degree but read some books on finance and business. I am married with a kid and we have a net worth of $500k. It is a bit scary to buy a million dollar business.

Question: I am curious if anyone has any suggestion on how to tell if it is okay to buy a business twice someone’s net worth. Is it too big of a step for a first business? Any suggestion on risk analysis or minimizing the risk here?

  • Human_Ad_7045@alien.topBEnglish
    1·
    1 year ago

    Here the Risk Analysis you requested: This analysis is based on; If a lender is dumb enough to lend you $1 Million:

    1. Failure
    2. Personal Bankruptcy
    3. Your home repossed
    4. Your children’s future is fukt

    OP, why would you even consider wasting $1.2 million, to run a failing business with an absentee owner as

    1. An absentee owner ?
    2. No prior ownership experience?

    This is called “rinse and repeat.”

    You will have the same outcome; FAILURE.

    The good news:

    • It appears unlikely you have $200k for a downpayment
    • IMO no lender will gamble on a $1million loan for a failing business to someone with no experience
    • You won’t F-up your childrens’ future.

    Don’t do it!