Entrepreneurs advice needed

[wcc]

I work for a company with benefits, 401k matching plan, 40hrs a week only. They don't allow overtime. I don't want to sound like I'm ranting because my job is actually pretty good. I don't care for what I'm doing but it really isn't that bad.

Anyways, my life long career dream is to own my own business one day. But for me to be able to leave my current "security" blanket I have figured out that the business NEEDS to make a north of 115K to make up for the benefits and the matching 401K plan. That's not realistically going to happen with a part time business. But hopefully it grows to the point I will feel more secure to leave and do the business full-time.

I really didn't want to invest more than 50K for a part time business.

So what are your thoughts/suggestions?

Is a startup "store front" type business out of the question since I'll only be operating part-time until it grows?

I like this idea: Maybe a .com site then? But I'm running into problems there because the inventory I want to sell the distributors won't sell me because it's a .com site. They want pictures of a actual store front. Their reasoning is that the store fronts can't compete due to the overhead costs. Has any of you ran it to this? All these retailers on-line can't all have a "brick and mortar" store fronts. What am I missing here? Maybe I'm asking the wrong distributors?

Lastly, buy an existing business and just go in and do the paperwork, inventory, etc.. as a part-time business. Bank the cash until I can start what I really want. In this case my 50K would be a down payment. I see bars, sub shops,pizza places, party stores all the time. Maybe something different? Any ideas on what type of business is a good business is to buy?

Sorry for being long winded but any thoughts or suggestions on this for me would be greatly appreciated.

BTW: Wayne, don't worry I'm not looking into becoming your competitor.

[Rick Lee]

Porn is where it's at!

[wcc]

The wife wouldn't go for it. She said there would be too much over-head......

Ok, I admit it that was bad...........

[Rick Lee]

I knew a guy in college who was a total geek. Yes, he got into our frat, but an outcast anyway. About 5 yrs. later I ran into him at a homecoming and he was a porn dot.com entrepreneur. He was passing around his photos of him with Ron Jeremy, Nina Hartley, the whole porn scene big names. He later sold out and made more than enough to pay for med. school.

[Paul T]

I'm in the exact same boat as you - don't really like what I'm doing yet need to make a fairly considerable sum to jump ship from the security of a cushy corporate job. My lifelong dream is also to be self employed and I've been looking at business for a couple of years now seriously. While I haven't made the move yet (not for a lack of trying), I'll tell you what I've observed and heard from others with more experience:

1. 90% of businesses for sale are junk. No record keeping, tax returns are a joke, sellers claim "$100k profit taken off the books", etc. Do lots and lots of due diligence for any business you look at and get a 3rd party valuation if you are not comfortable with the numbers. Always use an attorney or accountant.

2. Business brokers, for the most part, are one notch below used-car salesman on the trustworthy meter.

3. The selling price is usually a pie-in-the-sky dream. Most listings are worth substantially less.

4. Absentee ownership usually does not work - the successful small businesses, especially the service intensive ones you mention (pizza place, party store) are successful because there is a FULL TIME owner on hand all day long who cares about the business. This is essential - remove that element and the business will suffer big time. If you can afford to buy something and put a decent manager in there and pay them a GOOD salary, then maybe, but usually the numbers don't work out unless you are buying the business for cash.

5. You will work much longer, much harder and have less time off than you do now - but if it's in your blood, and you know if it is, you will be much happier.

I love the idea of a dot com but haven't looked into that too much. Love the porn idea too, I'm sure the $$ is there...

[Rick Lee]

A local Porsche guy who owns a car wash in the middle of nowhere makes HUGE money. He was telling me one day he can sometimes get 1000 cars through there in one day, most at $12-$14 a pop. He also said he literally walks around the parking lot, picking up change and puts it in the register. His reasoning goes that saving $5k in taxes will take $50k off the valuation if he decided to sell.

[john_colasante]

As far as buying a business. Know this. No business with decent positive cash flow is going to be given away. If a sandwich shop NET's the owner $300K in annual profit, that business is going to cost $3M. Don't be fooled by charlatans telling you otherwise.

PS: Paul T seems to have the straight dope.

[VaSteve]

?

Originally posted by Rick Lee
A local Porsche guy who owns a car wash in the middle of nowhere makes HUGE money. He was telling me one day he can sometimes get 1000 cars through there in one day, most at $12-$14 a pop. He also said he literally walks around the parking lot, picking up change and puts it in the register. His reasoning goes that saving $5k in taxes will take $50k off the valuation if he decided to sell.

Is that the 610? I see those license frames all over town.

[Rick Lee]

Yes, it is.

[Rick Lee]

My Chicom ex-fiancee wanted to open up an Asian-themed bar in DC with some help from her filthy rich dad and a big shot at the US Chamber of Commerce. Part of her business plan included my running the joint - this was not my suggestion. Trying not to be a wet blanket, I told her about some of my experiences working in bars and restaurants and what I saw owners, vendors and other employees doing. She didn't seem to grasp that if you open for lunch, you start work around 7:00am and if you stay open until you have to close at 2:00 or 3:00, you go home around 4:00 or 5:00. No holidays, no sick days, no vacations, watch your employees and vendors like a hawk and pay good managers enough to keep them honest. I think I talked her out of it.

[wcc]

Well, I actually owned a business for a while. I started a part time minor auto body repair business. It was growing slowly, but growing. Lots of long hours, but worth every minute. But it eventually turned out that most of my customers were car dealerships. They basically wanted a perfect job for free. Eventually, I got sick of dealing with them and that's not good to dislike your customers. Anyways, to make a long story short we had a couple of kids and someone offered to buy me out. I decided to go the secure route for the family and sell.

But now I'm looking again at something. I looked at lots of businesses for sale and nothing impressed me much. I found a gas station that was appraised at 400K, but listed at 200K. I was interested, so I looked over the paper work. It had lots of misc profit and numbers missing. Didn't feel right. But the DEQ stuff looked good. Now it is still for sale and now it is only 60K. The business broker said this is a great deal and I should buy it for 200K. Yeah right, there is something wrong here. I decided to pass......

I looked at a coin car wash. The guy wanted 300k, but wouldn't share any paperwork for it. I had to pass. Gotta see the paperwork.

The other thing I was thinking is that some baby-boomer are retiring or getting close to retirement and there may be some good deals out there?

Another question I have is about trying to find a supplier for a .com idea I have. I was just curious if I was wasting time trying to find one without a store front?

[econopa]

Bought a business in '84 and it's been profitable, but todays environment is much tougher, especially in your Mich. with the latest problems regarding jobs & therefore cash.
My case worked because: (1) was married & wife ran the daily sales,(2)bought an ongoing business from folks who had been operating for 30+ yrs.with a good reputation.(3) kept my daily job which (maybe most importantly) kept benefits, i.e. medical which could break any solo, no matter how successful, (4)Chose a retail business that the big-box retailers didn't want to deal with.
My suggestion1) keep your cash in your pocket.(2) When you find a product you think will work, think again. (3)Lease a site with short term lease options.If it works, extend.(4 & 5) You make your money when purchasing your inventory, not necessarily selling.(6)Watch your financing closely. Changing financial markets are quickly forgotten when you are in the middle of the ongoing business matters.
Hope this helps. Don't mean to sound so stern, but you are possibly about to start a venture that could not only eat-up that 50k quickly, but more importantly,waste time in your young life.
Good Luck!

[JavaBrewer]

I almost bought a liquor store in Lakeside in the late 80s. Found it through a business broker. Deal breaker was the lack of financial records, the only showed the profits. When I indicated that I needed to know the costs of said profits the broker said there were none... Oh so the store gets the liquor for free then...

[Paul T]

Originally posted by Rick Lee
His reasoning goes that saving $5k in taxes will take $50k off the valuation if he decided to sell.

So true, if only more owners realized this!! Most owners skim left and right and then demand a valuation based on the "phantom" income.

I always wondered if the reverse has ever happend - actually reporting MORE revenue to the IRS with the thought that an extra few grand in taxes for say, $20k in false income, will net an extra $100k in selling price. Doubt it..

[tc-sacto]

Before jumping in I suggest reading "The E-myth revisited" first. Simple, yet insightful. A good look at what it really takes to run a successful business.