Sell or Buy Business with goal of Hybrid Retirement

Owning a business can be a very rewarding experience.  Many will buy an existing business or start a new business with the thought of building the business to the point that it is a successful viable entity that they can sell and live comfortably on the proceeds.  There currently are millions of small business owners in various stages of planning the exit of their business.

I want to sell my business so I can retire comfortably.  There are also millions of aspiring entrepreneurs that are considering buying or starting a business with the goal of building it and growing it to the point they can sell it and retire comfortably. It seems so often when discussing what one does it is described as working or retired.( In today’s economy unemployed, looking for work is another status).

I beleive there is a  status between working and retired, and I refer to it as Hybrid Retirement. I certainly don’t see myself as any retirement expert or financial planner, but I have been thru the process of selling my business that I had for 20 years  and have developed my own views on retirement that possibly one going thru the daily work day does not have the time to consider.

My current profession is as a business broker in Florida. Within my community I am surrounded by retired people, and also after the sale of my business I did take “some time off”.  As a business broker I speak to many business owners considering the sale of their business. One of their top considerations is “If I sold would I have enough to retire?” .

 Why not aspire to Hybrid Retire?

I personally think the majority of those currently working full days either employed or as small business owners look forward to the day they can retire, stop working, and spend the rest of their days fishing, golfing, or hobbies. Of course your age at the time of cashing in can greatly affect your decision process. If you are 75 years old, maybe you say enough is enough and just head to the golf course.  But if you are fortunate to be successful and exit in your 40’s, 50’s or maybe even your 60’s your perspective, and needs could be greatly different.

The thought process for someone thinking of selling a business goes something like this:

I think I need to sell my business, walk away with $500,000 and that will be enough for me to retire.  But what if you had someone that would buy your business and allow you to walk away with $400,000?  Maybe this is a good time to entertain such an offer and consider Hybrid retirement.

Hybrid Retirement

Photo (c) yahoo.com

If you believe you need $50,000 per year to live off of, and the sale of your business may give you $35,000 to live off of, should you walk away or consider.?  Many small business owners get overburdened with the responsibility of owning a business, and really want to sell those responsibilities away to others.   Maybe making the $25,000 monthly payroll or covering the $100,000 per month fixed overhead cost month after month just gets to be too much.

Perhaps you can consider upon the sale of your business,  you can find another business to buy, possibly one that you have aspired to do for years, or possibly work for someone, under terms conditions that fit your lifestyle.  But this second business you don’t need to make that high monthly expense, and now you are supplementing the proceeds you have from your sale, and what you need to draw from the business is a lesser amount.  “Needing” to make $15,000 per year instead of $50,000 can be somewhat liberating!

Why Hybrid Retirement?

  • Do you really know that you can “do nothing” after working for 20, 30, 40 + years
  • You have someone looking to buy your business near the price you think you need.  maybe consider the offer and plan to supplement the difference with a second career, part time job etc.
  • This is an opportunity to build a profession around your lifestyle, whereas before you may have had to try to build a lifestyle around your business.
  • Are you really prepared to try to live off a “fixed income”- supplement that with something you aspire to do.

I think currently due to economic condition there are many small business owners delaying the exit / sale of their business because the recent performance of their company may not allow them to achieve the “walk away” money they believe they need to retire comfortably on.  There also are eager entrepreneurs ready to start a new venture with hopes of one day selling and retiring off the proceeds.  Maybe planning for both of the above scenarios can best be addressed by allowing yourself to consider Hybrid retirement.

I’m Looking to Buy a Business

“I’m Looking to Buy a Business“.  As a business broker based here in Florida  this is a statement that I hear often.  Within  the industry various statistics are stated regarding business buyers.  I have heard that 9 out of 10 of those that say they want to buy a business actually don’t buy a business.  Based on my experiences that statistic may hold true.  There are so many currently employed that during their 40- hour work week aspire to “be their own boss” by starting their own business or buying their own business.

Live Your Dream – Buy A Business

There are many unemployed out there that also think they may want to buy or start a business.  So while there are probably as many as millions of those both currently employed or unemployed that aspire to buy a business or start  a business, there is a much much smaller subset of those that even attempt to act on those aspirations.  Of that small percent that actually act on their dreams and or  goals a small percent may contact a business broker such as myself, and a small percentage of that group may find themselves at a closing table signing documents and actually buying a business.

Many business acquisitions are done with out the assistance of a business broker.  The numbers of how many entrepreneur types set off to buy a business and successful find a business without the professional assistance of a business broker are unknown to me.  I personally  had bought several businesses on my own without the assistance of a business broker.

These were strategic acquisitions within a certain industry.  I personally feel these types of acquisitions have a higher success rate.  Existing relationships, industry knowledge, focus,  and synergies provide for a higher success rate.   My views on this are based upon a fair amount of first hand experiences of myself and peers. This discussion is based primarily on non- strategic type acquisitions as referred to above.

Just one of the many steps in the process of buying a business that I assist in is how to apply some focus and some parameters to the basic statement of “I want to buy a Business”.  Being my company website is Sell a Business Florida I assume the person contacting me thru my website is looking to buy a business in Florida, but very often many of the other parameters have not been carefully considered.

When one is looking to buy a business criteria can range from looking at a certain specific company, to a certain “type” of business, to “I want to buy A business in the state of Florida”.  If you (or someone that you know) are currently employed and want to act on aspirations to buy their own business and gain the feeling of control of ones destiny, or are currently unemployed and view buying a business  to be the best means to a gainful career please consider the following.

Things To Consider Before Buying A Business

Below are a few parameters to consider when searching to buy a business.  The list can be long and extensive but the below is a starting point that allows the search to buy a business to maintain some focus.

  • Location-  For business purposes and family purposes does the business need to be in a certain State, County, City, or a certain side of town?  Or are you looking to buy a home based business that you can operate from most anywhere in the world?
  • Type of Business-  Are you looking to buy a certain type of business  like a Landscape Company For Sale or Towing Business For Sale , or are you looking to buy a business that has maintained certain performance levels such as “I want to buy a business that has at least 3 consecutive  years of  Net Income of $100,000+”.
  • Are you looking to buy a Hands on or Hands off business.
  • How much Available Capital to do you have? – This will set a range of businesses that you may consider.  Keep in mind that both Available capital for buying a business and Working Capital for running the business should both be considered.
  • Are you looking for a business that includes real estate
  • Are you looking for a business that provides Seller Financing?

Prospective Business Buyer ” Hi Scott I am looking to Buy a Business in Florida” Scott” Great,  What type of business are you looking to buy” Prospective Business Buyer“I really don’t know”