What are the benefits of buying a smaller business?

October 02, 2025

by a searcher from University of Louisville in St. Louis, MO, USA

There was recent post about the risk of buying a smaller business but what do people think about the opposite (i.e., SDE ~ 200k - 500k). What are the benefits of buying small? Does anyone have an example where they are glad or content that they didn't buy bigger?

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Reply by a searcher
in Seattle, WA, USA

One advantage is a potentially higher degree of multiple expansion from entry to exit. Starting with a highly owner dependent organization at a lower multiple. Grow and develop the organization over time to operate via a management team and it becomes more valuable to others at time of exit.

Reply by a searcher
from University of Denver in Boston, MA, USA

I bought small 330k SDE and have no regrets. You can do more acquisitions after the first one for a fraction of the effort, keep 100% ownership being self funded, there's usually less buyer competition and lower asking prices. But you need to have sales and marketing chops because you have to grow it and hustle to stabilize it.

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