How Much Money Can You REALLY Make Buying a Business in 2023?

The short answer is MILLIONS. With an SBA loan, buyers of small to medium-sized business can make anywhere from $3.5 million to $35 million. Plus, you can do it without putting any of your own money down! Acquisition entrepreneurship is a fantastic strategy to get the freedom and wealth you’ve always wanted.

This Is How You Make Real Money Buying a Business

You’ll be buying a business under the SBA 7a loan program. This allows a loan of up to $5 million with as little as 5% down. You’ll have to make sure that your deal fits the eligibility factors of the program including the type of business, the business’s credit history, and where the business operates. Rely on your lender to advise on whether the deal you’re looking at is appropriate.

Consider partnering with investors if you don’t want to put any of your own money down. Find investors who are experienced funding SMB deals and are looking for an investment of your size. In this type of deal, you will most likely walk away with 70% ownership of the business while your investors take 30%.

The amount of money you end up making from buying a business depends on you. Are you looking for a passive income source? Or do you want to grow the business into a money-making machine? Either path is valid and stands to make you millions. Your decision will depend on your lifestyle, your experience in business, and how much time and effort you can realistically put into the business. We walk you through each path below.

Make Passive Income TODAY, By Buying a Business

Buying a business is an awesome strategy for generating passive income. All you need is an operationally sound business and a trustworthy manager to run the business for you once you take over. Fulfilling your dream of passive income comes down to choosing the right business to buy. 

Here’s what you’re looking for: 

The business should be one that you can easily keep tabs on while not needing to be involved. For you, that might mean looking for a business in an industry or market that you understand. It might also help to find a local business to minimize your need to travel.

Ideally, you will find a company in good standing that is already operating well. This will allow you to generate that passive income right away. A business that requires an overhaul after you take over will involve added costs and push a meaningful ROI down the road. Consider successful family businesses with owners looking to retire. 

Find a business with a trustworthy general manager—other than the owner—who runs the day-to-day business. Avoid companies in which the current owner is heavily involved. If that’s the case now, you would likely also need to be heavily involved as the new owner—unless the general manager can take over these duties. 

Keep in mind that some sellers might work hard to convince you that they are not that involved in the day-to-day business. However, during diligence, you might find out that they’re needed at the office every week rather than the quarterly visits they mentioned.

Get to know the current management structure. Understand if the general manager is up to the task of fully running the business. More importantly, do they want to take on that role? Find out if they have any special relationship or loyalty to the current owner. Make sure they plan to stick with the business after you take over. 

If the general manager suddenly changes their mind and looks for other opportunities, you’d be left with a business and no one to run in. You might still make your ROI, but it won’t be the passive income that you’re looking for. 

Let’s say you find the right business. It’s running well. You’re confident in the general manager. You negotiate a great deal, and the business is yours. 

Your first step as the new owner is to promote that general manager to president. They will run the business for you. This is why you want to make sure you fully trust the general manager to lead the business in a good direction. While they run the business, you get the cash—the net of what you pay them which is usually less than $100k. 

Work to build your relationship with the general manager from the very beginning. Make your intentions known so that they feel secure in their role, even though the ownership of the business is changing. Respect that they have already been running this business and likely know a lot more than you. Give them autonomy, and trust in their decision-making. You wanted a passive income source, so don’t get involved if you don’t need to!

The biggest takeaway here is to find the right business with the right general manager. Then, sit back and watch your passive income come rolling in.

Multiply Your Investment With Business Growth

The other route is to focus on growth. Get your hands dirty with a business, and your potential to make money skyrockets. You’ll want to find a business that you are confident that you can grow. Maybe it’s a business that can benefit from new technology, restructuring, a better sales strategy, or your personal business contacts. What can you add to a business to help it grow?

Find a company that you see a future with. Make sure you have a vision for where you can take the company. Before your deal even closes, you’ll want to know the growth strategies you plan to implement including what they could cost you. 

If you’re able to successfully grow the business, you stand to make upwards of $35 million. That’s 10 times what you’d make if the business stayed static after you took over. Plenty of acquisition entrepreneurs have done just that. Don’t get us wrong. It takes luck, strategic thinking, and the right business, but if done right, your SMB deal can pay out big time. 

That $35 million is exactly why people play this game!

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