An Article about buying a very small SMB...

The small restaurant deal.

If you tune into many of the podcasts or YouTube discussions about buying a small business, you’ll often hear that size matters.

What people say is that you want to buy something big enough so that you have room to wiggle with the cash flow and, ideally, hire someone to run it for you.

I come from the world of ‘Main St. deals’ and I’d like to offer you some context for this conversation, especially if you’re new to the idea of buying a business.

I recently was hired by a couple who are buying a restaurant not far from where I live.

They needed an appraisal of the equipment and found me online.

They don’t know me from YouTube, Twitter or LinkedIn.

They’re your typical new immigrants to Canada and they’re buying a little restaurant and will definitely be working hard, long hours once the deal closes.

Let’s consider why the deal is the right thing for them, even though it’s quite small…

Let me sketch out the deal…

Less than $1M in revenue.

Seller earns about $100K each year from what I was told.

He works in it 50-60hrs/wk.

The new owners are a married couple and both of them will likely work these hours.

They’ll be able to displace some of the labour costs that the current owner has, so let’s assume that they’ll earn about $120K each year as a family.

Most of you will say that this is ‘buying a job’ and you’re absolutely correct.

So, why do people do this?

Because of their alternatives.

New immigrants to a place like Canada with foreign education, etc don’t qualify for the best jobs.

So, their alternative to this deal might be taking jobs at $13-18/hr.

This little restaurant deal represents a huge opportunity for them when compared to their options.

The broker selling the business is also a New Canadian.

He arrived about 10 years ago and started off in the restaurant business himself.

Now, he owns four restaurants in addition to his brokerage efforts.

That’s right.

Tiny businesses which are ‘just buying a job’ can lead to ‘just tiny holdcos.’

The opportunities that matter are the ones that open the door to you being able to take advantage of your efforts and creativity.

It’s not always the size.

It’s just getting started and be/ing smart about how you use the accumulations of cash and not letting lifestyle creep destroy your future.

https://www.BusinessBuyerAdvantage.com

Cheers

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