Buying a Business??--The Golden Years!!

Posted by: Fernando Simo

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As we move into the golden years, something happens to many of us (yes, it happened to me)—we want to become entrepreneurs!  I think that the need to protect the financial viability of the rest of our life, force us into thinking that the only way we can effectively do so is by investing in a business of our own.   Please, think it over.  More often than not, we lose a significant amount of our life savings, if not all of it.  We foolishly use our 401K, the equity in our homes, etc. to fulfill the entrepreneurial dream: Financial Security and independence.

So, here is my two cents on this subject.    

1.                  Experience.  Please do not buy a business unless you do have some level of experience running this business. 

2.                  Investment.  Your total investment should be less than 20% of the amount you have in savings.  If you must borrow from a commercial bank or any other source, stay away from personal guarantees—easier said than done!

3.                  Business Model.  The easier the business model, the greater your chances of success.  Stay away from complicated models, such as restaurants, where you handle inventories, people issues, the health department, and a significant amount of overhead.  There are many businesses out there with low overhead and ease of management--Normally in the service industry.  Select those!!  By the way, although the business may be, a franchise system IS NOT a simple Business Model.   The only one benefiting from a franchise system is the franchisor.  The franchisees find themselves paying up to 10% of the net revenues of the company (royalties plus advertising and others) while struggling to make ends meet.

4.                  Run it.  Absentee ownership does not work.  If you must buy a business, make sure that you are the owner-operator of the business.   A business ran by an absentee owner may be losing money through understated revenues and inflated expenses.

5.                  Prepare a Financial Plan.  Know about the good, the bad and the ugly of the business.  Use assumptions indicating the best and worse outcomes and develop an exit strategy to get out of it.

6.                  Use Professional Advice.  Use lawyers to help you through the myriad of contracts and agreements you may sign and accountants/business consultants to help you decipher the financial requirements.    Additionally, get independent advice from a business broker prior to buying your business.

7.                  Work.  Are you willing to work 24/7?  As an owner, you may be required to do so.

As you enter into your golden years, you just may be happier getting the 5-10% earnings you may get from your investment savings.  Enough said.

Should you want to know more about buying or selling a business, please contact Fernando Simo at 407-361-8886, email me at or please visit my webpage at .