Big decision coming up - business or job

[Vipergrün]

As always, thanks to the Pelican brain trust for words of wisdom, reality checks, support, etc.

I've been in escrow on a small business, while at the same time interviewing for jobs in my field after being laid off.

Business is auto-related, job is IT/technical, which I have been doing for 23 years.

Tomorrow is d-day, so to speak. I need to sign off on all contingencies of the offer, after which I lose a substantial deposit.

I also have 2nd/3rd interviews with a company I would not mind working for.

If I go the business route, I'll be all in and borrowing against the house.

If I go the job route, it will be familiar and comfortable but may always wonder 'what if'.

Business is profitable and if it sustains, will provide a comfortable lifestyle.

Job will provide a salary I have gown accustom to.

Decisions, decisions. Where's the rum :--)

Thanks for listening!

-Brad

[Chocaholic]

Tough call, but if it were me, I'd need to consider some things you didn't mention in your original post. What is the extent of your risk ability? In other words, family and obligations. Kids in college depending on you? Spouse working? Overhead? Etc?

Bottom line, if you don't have others dependent on you, or for some reason, that isn't a significant consideration...pursue the business. If the opposite extreme is true, you really need to weigh the risks carefully.

[Hads930]

Is the business in California? If so can it be moved or is it only success in its current location? My understanding is CA is not a real friend of business, not in that they are trying to put you under, but certainly are not doing what is best for you either. Just my .02? Not sure I could borrow against my house in light of the financial problems that your state has.

[M.D. Holloway]

or just pitch it for 3 months and become an 'Urban Thriver"! (see my post for details...)

[Vipergrün]

Good points! Spouse works, but will need to be somewhat reliant on business income. Yes, it's in CA and not really movable.

Lubie, saw your thread. Believe you and me, thinking twice :--)

[M.D. Holloway]

You have good choices, tough ones but at least you have choices.

[stomachmonkey]

What is your appetite for cash flow management and how well do you deal with stress?

I've done it both ways several times and while working for myself has always had greater profit potential it's also been more stressful.

I'm sitting here at 8:30 after having already worked 10 hours with my US based clients waiting for my client in Japan to come online so I can spend an hour on the phone with them.

And I'm sick on top of it.

All I want to do is go crawl into bed and sleep for the next couple of days but I don't get to call in sick.

[aigel]

Can you tell us more about the auto business? Are you opening a lube shop, or something more specialized, where the barrier of entry is high? That would be important to know. You can probably guess my input, depending on the answer to that question ...

I am all for excitement and taking a risk ...

G

[Bill Douglas]

As long as the business will make, considerably (whatever this means to you in this case) more than you would get just working. Also if you don't like it can you improve the business and sell it for more than you bought if for, or would you take some kind of hit?

[rusnak]

I'm a risk taker and a stress junkie. I've not called in sick and don't take vacations because I am self employed, so you know where that puts my perspective. And oh yeah, California hates us.

[wildthing]

Business. Just not all your eggs in that basket. How much will be you ROI? It better be more than 20% plus your 'salary' from the business.

[Don Plumley]

Being in control of one's destiny is the surest independence. You can always get a job.

Yes, all the responsibility is on your shoulders. And all the success. Good luck with your decision.

[jyl]

What kind of business are you thinking about buying, where there is a drop dead deadline to sign off all contingencies or the next day the deal vanishes? Suppose you want to do another couple weeks' due diligence. Do they have another buyer lined up?

[look 171]

Originally Posted by rusnak

I'm a risk taker and a stress junkie. I've not called in sick and don't take vacations because I am self employed, so you know where that puts my perspective. And oh yeah, California hates us.

Keep in mind that there are new business opening up every day in CA. I agree that we are not business friendly, its just more fee you have to pay. Depend on the Auto related business, the AQMD will try and kill you.

[look 171]

Waiting to hear more about it. Oh BTW, is you medical insurance covered by your wife's job? That can be a few bucks.

[LeeH]

I've been self employed longer than I've been employed. They both have their ups and downs.

I honestly feel a good part of business success is pure, dumb luck. Some will say you make your own luck. Maybe. I owned a small business, grew it, merged with a competitor, grew it some more and sold it. I know I had some influence on the outcome, but still feel a big part of our success was timing. I just happened to get into the right industry as the market started booming. We just happened to decide to sell at about the peak. There just happened to be a qualified, motivated buyer willing to pay our (what I felt at the time) lofty asking price. The buyer happened to make a creative offer that my partner and I happened to accept that resulted in a sale price 20% HIGHER than what we were asking.

I guess my point is that you never know how these things will go. I train people to use QuickBooks software now, and do some small business bookkeeping. I see businesses come and go. There are quite a few extremely smart and talented people who just happen to end up bankrupt from their small businesses.

I think the thing I see most that concerns me when people start/buy small businesses is that they are too optimistic. They think THEIR situation will be different than the guy who owned the business that just closed down in the same retail space. They think THEIR management skills will see them through. They think THEIR product is better than average and will draw in customers.

If you go the business route definitely get help from a disinterested third party. Too many times friends and family will say, "Go for it!" You need to find a "devil's advocate" who will point out all of the negatives. What's the worse case scenario if the business fails? Do you end up bankrupt? Do you lose our house? Retirement savings? Marriage? At your age, can your recover in the event that the worse case scenario comes true? My sister and her husband lost their life savings trying to run a restaurant. They're in their 70s and still working just to pay the bills.

I've looked at a lot of businesses for sale and have come to the conclusion that the businesses that make a lot of money and are very easy to run RARELY come up for sale. Why would they? Most businesses being sold have a "gotcha" that the seller and broker are not going to point out to you. One business I looked at had a dozen "independent contractors," but no employees. The owner admitted that I could expect to lose some of the people if I changed the contractors over to W2 employees as required by law. Another business I considered was all in the owner's head. He had unusually in depth knowledge of his field learned over many years. One company had multiple family members working there. Most weren't on the payroll. A new owner's realistic payroll expense would have resulted in a fraction of the profits they were claiming.

Not trying to talk you out of the business route, but just make sure you are, in fact, buying a business. Last business I looked at, while technically a business, was really more of a job. Guy paid himself a decent, but not stellar salary, but was working six days/week. Every week. With no end in sight. Time off? Not an option? Vacation? Nope. It was hard to get an appointment with him just to discuss things in person because he was so busy. In my mind, he was self employed, but at a job. Quite a different story than being a business owner. In this case, the business owned him. I could get a job doing just about anything, work as many hours as him and make as much money. And, I could do it without going into debt or risking my savings.

[Vipergrün]

So, the business is an establish full service repair, brake, maintenance franchise. No, it's not a Jiffy Lube or Meinike. Yes, there are franchise nightmares out there, and there will be associated fees. However, this one is very supportive and has a strong owner network in SoCal. This shop has been in the area for quite a while. I would have a lot of freedom and flexibility to run the shop, implement ideas, etc. It is staffed with employees who will come over in the deal, which should help with the transition. It will likely be 6 12 hours a week initially, even with a manager until I know it inside and out.

I am trying to have a very realistic approach to the deal. The current owner is 80+% absentee. I will be much more hands on, but not necessarily turning wrenches, but I could.

Gross sales have been trending up, as have net profits.

The broker claims to have another interested party, I may call his bluff and ask for more time.

Wife has health insurance, so that is a plus

Thank you all for your replies!

-Brad

[look 171]

Brad,

I am going to throw this out at you but don't have answer for you. I see lots of auto repair places as I drive around town. They aren't usually empty but full of cars in the lot waiting for service. Rarely do I see the owner hanging out smoking taking a break with no car on the lift. I am not talking about the smaller one or two man shops with only one bay in an industrial complex. The ones I am talking about has good foot or should I say business traffic right off the main road. They are jam packed with cars. They must be junks that have been sitting, waiting to be sold off or they are really backed up with a ton of work. I am sure you notice it up there too.

[Vipergrün]

Originally Posted by look 171

Brad,

I am going to throw this out at you but don't have answer for you. I see lots of auto repair places as I drive around town. They aren't usually empty but full of cars in the lot waiting for service. Rarely do I see the owner hanging out smoking taking a break with no car on the lift. I am not talking about the smaller one or two man shops with only one bay in an industrial complex. The ones I am talking about has good foot or should I say business traffic right off the main road. They are jam packed with cars. They must be junks that have been sitting, waiting to be sold off or they are really backed up with a ton of work. I am sure you notice it up there too.

Yeah, this place is 6 bays, 6 lifts. Every time I have driven by, 4-6 bays are full and 3-5 cars in the lot. I'm sure there are slow days. The business is in a really good location, at the intersection of two major roads. Every car needs brakes and oil changes, hopefully more. The corporate office prides itself on 'honesty' and will not tolerate deceitful practices, over charging, etc.

I guess it boils down to risk. What am I willing to lose if things turn to *****

[aigel]

I would not do this. Especially not leveraging the family finances. Too low a barrier of entry. Anyone can run a shop like this. This is going to be a shark tank IMHO. You might as well open a restaurant. Typical example of a "red ocean". Why don't you get into business in your field of expertise?

G