The BizBuySell Small Business Community

  • Get Expert Advice

  •  • Find Local Service Professionals

  •  • Share Your Experiences

My buddy has $100k to invest and we both want to start a business.

He's got a little time to work, but I have a lot more time. I work as a tech consultant for startups so you would think I would have a great idea for us to invest in. But I dont...I am good at starting businesses from an administrative standpoint (state filings, accounting, technical setup, websites, emails etc), but don't have actionable ideas with a lump sum of money.

I have considered buying established business (searching places like this) as well as online businesses through flippa.com, but have a problem with the real valuation of a company. Plus from what I have seen on flippa, if a site is netting 10k/month, they want at least $120k...and its hard to judge the validity of their numbers and growth potential. And we dont care about the stigma of the industry (ie adult/gambling).

No User Photo

Answer This Question

max 5000 characters

Web Reference (optional)

e.g., "www.mywebsite.com"

Review Community Guidelines

Help keep our Community clean and on topic. The BizBuySell Community is a place where you can discuss your questions, concerns and knowledge with others you can trust. It is not OK to use this forum to solicit others for personal or financial gain, or to rant about personal issues. It's all in the guidelines.

Submit Your Answer
Answers (18)
No User Photo
IC Tool Suite
Sarasota County, FL

Hi Bryan,

I can assist if you are considering franchise strata up opportunities,

John Briches
Account Executive
Macro Business Capital
941-447-8370
johnbriches@gmail.com
www.mbcfunds.com/johnbriches

Aug 14, 2010
No User Photo
Biz2Credit LLC
New York County, NY

Bryan,
Biz2Credit (www.biz2credit.com) can help you arrange business acquisition financing. We have over 100 lenders on our platform offering 150 plus products. Register for free on www.biz2credit.com and chose the case manager option to walk you through the whole process.

Aug 14, 2010
No User Photo
Bartow County, GA

Did any of these answers solve your problem? What did you end up doing?

Aug 12, 2010
No User Photo
Durgan and Associate Business Brokers
Camden County, MO

Hello from John York with Durgan & Associates. I have a one year old restaurant named Chickies, The developer / owner has health problems and is going to sell his life long dream. I am working with him to franchise this concept. You can buy this with $ 100,000 down and the balance owner finance. The first 15 months operating numbers are great. This business is located at Lake of the Ozarks, MO I have two other stores to be built and would pay franchise fees to you monthly. John York 636 497 5597

Aug 5, 2010
Buy-a- Company

I am always skeptical when I hear a business owner who wants to sell for anything less than about 3x cash flow. Are there numb business owners who are bad at arithmetic? Sure, but most business owners are very smart. Why would a smart business owner sell a legitimate company for "5 times the monthly net", as one poster wrote below? The seller will make that much money before the escrow closes.

Most of those "deals" are bogus (phony numbers, problems ahead, more work than disclosed, etc.). I firmly believe you get what you pay for, and if you're able to buy a company for 1/2 x cash flow, there is a red flag somewhere.

If you can buy a legitimate business that is netting $10k per month for $120k, that is a bargain! Just go in with skepticism, and verify EVERYTHING. Then, turn around and sell it for what it's really worth, doubling your money.

Sorry, I have seen thousands of these low multiple "deals", and have never seen a single one that was as represented. Be careful.

Aug 4, 2010
Joseph DiBello
Vested Business Brokers
Career Development Officer/Broker
Suffolk County, NY

Bryan

Check our listings, click on my name then "my links" call me to get started

Aug 4, 2010
No User Photo
Signal Hill Holdings, LLC
General Partner
CT

OK reality check. You can start a business which pays you nothing. Or you can buy a business which might get you $10k a month. Big difference. Doesn't sound like you want to start from scratch. The valuation problem is very real but can be overcome. If you go the Flippa route there is no reason in the world you can't do it with less than $120k. If the niche is half decent you shouldn't have a growth problem either - just have to push the right marketing buttons. Don't think for three seconds you have to pay all cash even if you meet the asking price, which you should never do. Offer 40% down on a $20,000 site and build it up. Bid 5 times the monthly net. And buy another site once you get the feel.

Jul 20, 2010
Steven Stokes
Business Buying Monster
Los Angeles County, CA

Bryan

I hear this situation A LOT! Here's my best advice. Do something that you absolutely love, believe in and doesn't feel like work to you. Create a product or service around something that you love doing and that way, when you're putting in 80 - 90 hours a week at it you're not tired or burned out because it's something you love doing.

The more time, effort and focus you can put into your idea the more likely you are to succeed.

Second piece of advice - Test, Test, Test, Test, Test, Test.

Once you come up with an idea test it. Go to malls in your area and test your idea. See if people would like it, buy it, and ask for feedback.

Most important question once you find out if they like the product is how much they would be will to pay for it. Price it accordingly.

Document everything because if you need further funding, investors like to see that you have been constantly testing and revising your product or service.

There is a lot that goes into this but I hope it's a good start for you.

Best of luck and hope this helps.

Jul 20, 2010
jim thomas
FlagMag
president
Rockingham County, NH

i have a 12 year old sports web site with a google rank of 4, and 20,000 visitors per month, email me if your interested,

jzcostarica@gmail.com

Jul 19, 2010
No User Photo

Bryan, where are you looking to buy?

Jul 16, 2010
No User Photo
Factory D
Owner
Tarrant County, TX

i have a web based company for sale for 20k with another total of 5-10k invested to get it up to max potential. profits are currently about 700-1000 a week but with the investment could triple or more. fourgpowersales AT aol.com david

Dec 15, 2009
No User Photo

Try a deli and/or diner. It's hard work, but good rewards and fun. Plus in the right area it is an excellent investment that will grow. And you can do this anywhere there are people. We doesn't like to eat great food? Also, have 2 possible locations in Florida under a different name that may be available together or separate.

Nov 8, 2009
No User Photo

Hi, Have a Rhino Linings Business in Fl. looking to go mobile with the potential to make a good profit. Only need around 25k to get it going. Infiniterhino@aol.com

Oct 26, 2009
No User Photo

if you have 100k ,we have business in houston area doing 200k gross, net 40 to 60k . he is my friend. equipment and inventory $100k and business 39k willl finance.you will get your money in two years back, no commission involved. e.mail: ashdharia@netzero.net

Oct 21, 2009
No User Photo

hi bryan my name is philip i am in the pizza business i seen your add while i was looking for another business to buy on bizbuysell. i just sold my business couple months ago i have another place for sale also ounce that one sells i plan on moving in the florida area. my plans are to buy and sell pizza places just like the stock market buy low sell high. if you would be interested in that let me know. you do not need any experience.philip4321@charter.net

Oct 17, 2009
Jon Holmquist
Edgemaster Model 400 sharpener
President
Marion County, OR

Hey Bryan, i may sound like a broken record but I would suggest you look at franchises available. You have the FTC on your side with the Disclosure Document and such, so you should be able to determine of you are getting a good deal. You can visit current franchisees to see if you can fall in love with the brand, system and product before you make a cash investment. Maybe you will make more money by pulling a roulette wheel but there are no guarantees there. The cost of looking at a franchise is "time" and you should spend due dilligence time anyway. good luck, Jon at Edgemaster.

Oct 17, 2009
No User Photo

Hi Bryan,
I'm a sm. RE Investor, who's very happy with my RE investment from Stone Equity Group. I double my
investment within 3 mos! You can invest with them regardles of where you reside.
I'm making this testimonial on my own, because this co., is awesome not just by helping the investor, but also, they give away a house per month to needy families in dif. US states, as well as revitalizing communities, therefore greatly helping our economy. For complete info. visit: www.Stoneeg.com
DON'T WORK FOR MONYE... INSTEAD, MAKE YOUR MONEY WORK FOR YOU...!
Marysol Martin
(760)270-3699

Oct 17, 2009
Chuck Woolweaver
FranchiseConsulting.Net
Franchise Your Business in 60 Days
Palm Beach County, FL

Where do you want to start the business if it's brick & mortar?

Valuation is generally based on Tax Returns, P&L Statement (prepared by an accountant), or Owner To Prove plus market conditions to determine an accepted multiple times owners benefit.

Once you make an offer, you should have a due diligence period so you will have enough time to verify the numbers and other pertinent information.

Go to my website and look at many businesses for sell in various industries (there are approximately over 5000). This will provide you some guidelines.

Oct 16, 2009

Start a Discussion