Buy a business or find a job? How to decide
Buying a business instead of a job makes sense when you have the savings you can afford to lose, relevant experience, and the stomach for owner risk. If you need a steady paycheck soon, a job, or a job while you search, is the safer path.
By Justin KullaLast updated
Questions to answer first
- How many months of living costs can you cover with no income from the business?
- How much can you invest without risking your home or retirement?
- Do you know the industry, and can you run the day-to-day?
- What does the business earn after a fair salary for the owner?
Checks before you buy
- Review several years of tax returns and financial statements with an accountant.
- Ask why the owner is selling, and how much depends on the owner personally.
- Have a lawyer read the contract, the lease and any debts that come with it.
- Compare the price with what similar businesses sell for.
A middle path
Work while you look. A job or contract income gives you time to find the right business and the confidence to walk away from a bad one.
Frequently asked questions
Is it riskier than a job?
Usually, because your pay depends on one business and you may have debt tied to it.
Can I use a loan?
Many buyers use a bank or Small Business Administration loan. Lenders look at the business’s cash flow and your own money in the deal.
Can I use my 401(k)?
Some plans allow it through special structures, with taxes and penalties if done wrong. Talk to a tax adviser first.
What if I am not sure?
Keep looking for work. You can still buy later, and your search will teach you which industries you like.
Applying and hearing nothing back?
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