If you get a loan to buy this business, it will be personally guaranteed.
Do you mean that getting a loan would definitely cause losing life savings? That is something I am afraid of. It feels too much is at steak. Would it make sense to ask for a seller financing somehow tied to future earnings to avoid the risks of a sinking ship?
If you get a loan to buy this business, it will be personally guaranteed.
Do you mean that getting a loan would definitely cause losing life savings? That is something I am afraid of. It feels too much is at steak. Would it make sense to ask for a seller financing somehow tied to future earnings to avoid the risks of a sinking ship?
I thought seller financing was more like pay $X/year to the seller sort of thing. Is it possible to tie the payments to the future revenue? Like paying the seller half the revenue until the full amount plus interests are paid?
Yes I know that I don’t know all the details yet. I will learn all of them if I convince myself that buying a million dollar business is not a terrible idea. I was trying to get some insight here on how big of a business one should try to buy as their first business.
Do you think it is at least worth to keep investigating or should I focus on a business more in the range of 500k?
The listing only tells me that the gross revenue is 1.5m. I have not yet reached out for more information (because I know that they will ask me to sign an NDA and I was not yet ready for that step). This is an indoor playground business. By looking at some similar businesses, I guessed their profit margin as 6-7%. That is how I arrived at 100k/yr profit.
I am still investing how to buy. I don’t yet know if there will be a seller financing, that would be my first option. If not, maybe that’s already a red flag and I should reconsider this whole thing. I can afford putting down 100k. I can probably raise some more 100k from my network for down payment and get a loan for the rest.
The number is not around that. The net profit is around 100k/yr and I think I can take it to 200k or maybe 300k range in a year or so. I don’t yet see a 500k opportunity :)
Why was clover a bad choice?
I thought the valuations are usually based on profit or cashflow. In this case I think net profits are around 100k so 1.2m does sound expensive. If it was around 300k, wouldn’t it make more sense?