Calling small/medium business owners

[EZduzIT]

Hello small to medium sized business owners. I have some questions for those of you who acquired your businesses through sba loans. My wife and I both work w2 jobs and have a strong desire to be entrepreneurs. We are searching for businesses to acquire in Colorado where we live. I’m curious on your experiences going through this process and what business you got into? Did you have any prior history with that sort of work? How do you feel after leaving your w2 for this journey? Do you currently or in the future have a plan for transitioning to being semi absentee? Really looking forward to where this could lead! Thanks!

 

[Glassn24]

Biggest hurdle is 30% down of personal funds for the purchase. Also, some larger banks are SBA preferred lenders which allows them to offer 20 yr. Fully amortized loans. That is the best option instead of forced Refi every 3-5 years. Best decision you’ll make! Best of luck

 

[EZduzIT]

Biggest hurdle is 30% down of personal funds for the purchase. Also, some larger banks are SBA preferred lenders which allows them to offer 20 yr. Fully amortized loans. That is the best option instead of forced Refi every 3-5 years. Best decision you’ll make! Best of luck

Thanks for the info! Is it generally mandatory to put the 30% down or have you found options for 10-20% to get you into something a little bigger?

 

[2ski]

So you've decided you don't like to work much and would like to own a business so you can transition to playing most of the time and working as little as possible? Am I getting that correctly?

I see people that try to do this and as soon as they are semi absentee the business goes downhill. How are you at leadership? Do you have a leadership position right now? Would your leadership style be top down, if you are/were a leader? Because quite frankly, everyone that I see succeed at semi absentee is an effective leader. Those that fail want to think they are a leader, but in reality are not great at it.

 

[deltadukman]

No comment on the actual "work" part of it, but choose your SBA lender/administrator wisely. I have worked with people who were doing an SBA loan and the lenders don't have a clue about SBA loans and it was a nightmare. My most recent one ended up scrapping the SBA route all together.

 

[Glassn24]

Thanks for the info! Is it generally mandatory to put the 30% down or have you found options for 10-20% to get you into something a little bigger?

For new business owners without a history of running a business, 30% is minimum (it’s a government backed loan, so requirements are standardized). I will say that when you do make the switch, plan on 70 hr weeks for the first 2-3 years and any cash drawn is a missed opportunity to grow the business. It’s unique in that it is fully merit based, and what you put in, you will get out 10-fold. Treat it like an annuity where the true reward could be 5 years down the line and you’ll never regret it.

 

[svivian]

For new business owners without a history of running a business, 30% is minimum (it’s a government backed loan, so requirements are standardized). I will say that when you do make the switch, plan on 70 hr weeks for the first 2-3 years and any cash drawn is a missed opportunity to grow the business. It’s unique in that it is fully merit based, and what you put in, you will get out 10-fold. Treat it like an annuity where the true reward could be 5 years down the line and you’ll never regret it.

30% is not true, many banks and SBA offer programs as low as 10%.

To the OP you will need to get your ducks in a row. You’ll need business revenue projections for two years, detailed business plan and a bunch of other forms to fill out from the bank/sba

If you have zero history in the industry you plan to run a business in then I would suggest keeping the w-2 job while trying to start the business up for two reasons. 1) there’s a good chance it will fail. 2) you will have a much better chance of getting approved if you plan to keep a steady income while it’s getting started.

Also if you don’t have any experience it helps to find someone in that industry who does who is willing to help you. When filling out an SBA application there is a form where you will fill out managers and you can list their experience there.

Colorado has many banks that are SBA preferred lenders, go there in person and save some hassle and time. If you go the online route good luck.

 

[Rich M]

I know a guy who bought a floor refinishing business for his son and ended up doing it himself. It is paying well.

Know another guy who is a landscaper, also doing pretty well.

Knew another guy who was a pool maintenance fellow. He sold his business and retired.

I started a consulting firm in 2005 and was staying afloat until the 2008-2010 recession. Wiped us out - went belly-up - shut her down in 2009.
Blah-blah-yadda-yadda
If had to do it again, would have stayed gainfully employed in 2005 instead of starting my own business from scratch. Gained some solid experiences and also some very humbling ones too.

If you are gonna buy a business with established clients, that's a better way to go than scratching up yer own and going into a competitive market. From what I hear, there are classifieds for folks selling businesses but I've never seen one.

What are you gonna do?

 

[EZduzIT]

So you've decided you don't like to work much and would like to own a business so you can transition to playing most of the time and working as little as possible? Am I getting that correctly?

I see people that try to do this and as soon as they are semi absentee the business goes downhill. How are you at leadership? Do you have a leadership position right now? Would your leadership style be top down, if you are/were a leader? Because quite frankly, everyone that I see succeed at semi absentee is an effective leader. Those that fail want to think they are a leader, but in reality are not great at it.

I should work on my leadership skills. I’m currently a professional firefighter so I have good decision making skills, work very hard contrary to public opinion. Although I obviously haven’t held a chiefs position being so young. So leadership is something to work on for sure. Thanks for the insight! How did you learn leadership and get started?

 

[Glassn24]

30% is not true, many banks and SBA offer programs as low as 10%.

To the OP you will need to get your ducks in a row. You’ll need business revenue projections for two years, detailed business plan and a bunch of other forms to fill out from the bank/sba

If you have zero history in the industry you plan to run a business in then I would suggest keeping the w-2 job while trying to start the business up for two reasons. 1) there’s a good chance it will fail. 2) you will have a much better chance of getting approved if you plan to keep a steady income while it’s getting started.

Also if you don’t have any experience it helps to find someone in that industry who does who is willing to help you. When filling out an SBA application there is a form where you will fill out managers and you can list their experience there.

Colorado has many banks that are SBA preferred lenders, go there in person and save some hassle and time. If you go the online route good luck.

10% is usually reserved for a business expansion Ioan, for equipment/additional location etc.. for purchasing a business without any experience 30% will be what they are looking for.

 

[EZduzIT]

No comment on the actual "work" part of it, but choose your SBA lender/administrator wisely. I have worked with people who were doing an SBA loan and the lenders don't have a clue about SBA loans and it was a nightmare. My most recent one ended up scrapping the SBA route all together.

Interesting, thank you!

 

[svivian]

10% is usually reserved for a business expansion Ioan, for equipment/additional location etc.. for purchasing a business without any experience 30% will be what they are looking for.

An SBA 504 loan only requires 10% down for startups.

We also have no idea what the op is using the funds for. But you most certainly get 10% as a down payment for a startup

 

[EZduzIT]

I know a guy who bought a floor refinishing business for his son and ended up doing it himself. It is paying well.

Know another guy who is a landscaper, also doing pretty well.

Knew another guy who was a pool maintenance fellow. He sold his business and retired.

I started a consulting firm in 2005 and was staying afloat until the 2008-2010 recession. Wiped us out - went belly-up - shut her down in 2009.
Blah-blah-yadda-yadda
If had to do it again, would have stayed gainfully employed in 2005 instead of starting my own business from scratch. Gained some solid experiences and also some very humbling ones too.

If you are gonna buy a business with established clients, that's a better way to go than scratching up yer own and going into a competitive market. From what I hear, there are classifieds for folks selling businesses but I've never seen one.

What are you gonna do?

Planning to acquire an established business with a good customer base already. We obviously look at BizBuySell, LoopNet, etc. but we are also sending out letters to potential businesses we are interested in.

 

[Wrench]

On a fireman schedule, I'd shoot for work I could schedule and keep my day gig. You have fantastic retirement benefits coming and decent pay for your efforts.

You could take on several ventures, depending on what you are skilled and motivated by.

I had a at home rifle smithing shop that fit your schedule perfectly. My problem was Washington makes it near impossible to do business and I am trapped here till the kids graduate.

To do it over, I'd have done what Glen Seekins did and lease a machine and run small parts that do not require paperwork.

 

[Glassn24]

I should work on my leadership skills. I’m currently a professional firefighter so I have good decision making skills, work very hard contrary to public opinion. Although I obviously haven’t held a chiefs position being so young. So leadership is something to work on for sure. Thanks for the insight! How did you learn leadership and get started?

The biggest takeaway I could give you, is leadership and your employees trust in you is only as good as your commitment to them. Leading by example from both a time and energy standpoint sets the tone for how your employees will “show up”. You can earn the right to step away as a business owner, but it won’t be for a while, and you’ll still need people on your team that can speak to the time you put in previously.

 

[Dsnow9]

On a fireman schedule, I'd shoot for work I could schedule and keep my day gig. You have fantastic retirement benefits coming and decent pay for your efforts.

You could take on several ventures, depending on what you are skilled and motivated by.

I had a at home rifle smithing shop that fit your schedule perfectly. My problem was Washington makes it near impossible to do business and I am trapped here till the kids graduate.

To do it over, I'd have done what Glen Seekins did and lease a machine and run small parts that do not require paperwork.

I would do this. I started my tree business when I was full time with the city of denver. Slowly built up the business and never had to take a loan or have a marketing budget. After 5 years I left my city job and run my tree business full time.

 

[gbflyer]

We looked at it and more when the Covid loans were flying around. Our business owns a pretty good pile of heavy construction equipment and they wanted replacement insurance on everything (some of the older junk isn’t worth the premium but we still need it) and also they put a UCC filing on everything so you had to ask permission to sell. So we decided to tough it out.

My sis and bro - in - law are trying to sell a medical practice to a couple who are using SBA. It’s been a multi-year nightmare that’s just about to go tits up.

My buddy sold a mechanic shop to an employee through it. Worked out fine.

I guess the point is that if a bank has so little faith in a loan as to have to participate with SBA, the borrower might want to take another look at the situation.

 

[DanimalW]

Come back for advice once you’re eyeing a business. I know some people that purchased roofing companies with no industry experience that thought they just needed to manage it. All failed miserably. Some businesses are little easier than that, but I still think if you’re buying a restaurant, you better know how to cook. I’m not suggesting you don’t go for it, because no risk, no reward. But I’d also suggest looking at the big picture. How far are you from retirement? What’s your exit strategy? Finding a competent buyer for a business is a difficult task as well. And every values their business far higher than it’s actually worth because only they know how much sweat equity they put into it, which doesn’t account for actual returns.

 

[Dsnow9]

Come back for advice once you’re eyeing a business. I know some people that purchased roofing companies with no industry experience that thought they just needed to manage it. All failed miserably. Some businesses are little easier than that, but I still think if you’re buying a restaurant, you better know how to cook. I’m not suggesting you don’t go for it, because no risk, no reward. But I’d also suggest looking at the big picture. How far are you from retirement? What’s your exit strategy? Finding a competent buyer for a business is a difficult task as well. And every values their business far higher than it’s actually worth because only they know how much sweat equity they put into it, which doesn’t account for actual returns.

I agree with this for sure.

And buying an established business has all kinds of new challenges as well. How is the relationship with the current staff. Who runs the show? What are the dynamics.

With no previous experience in a given industry the OP would be risking a lot. You will be dependent on current staff for a long time and that costs a lot more money than if you can run things yourself and start small.

 

[mtnbiker208]

I can't help on the sba loan, but i have been self employed for 20 years.

Own your decisions, especially when you make the wrong ones. And you will. Then learn from them.
Learn to function with out sleeping at night. It sucks, but it is part of it.
Sales does not equal profit, never has and never will.
You have to make a profit to stay afloat, detorating infrastructure eats up capital quickly.
Be willing to think things thru multiple steps down the road, not just a couple of steps.
Work the problem backwards, that way you know how to go forward.

Makes sure you are willing to lose everything you have. If you are not, you are not committed enough.
You have to go to work. in the short term the mice won't play, in the long term, the mice will play when the cat is away.
if you have employees, they will be your biggest attirbute and your worst nightmare.