How Big a Business Should I Buy

How big a business should Luke buy?
If he gathers all his money together, Luke says he can buy a business up to $10M.
Should he?
In this video, I lay out the considerations that you should be thinking about when you decide how big a business to pursue.
Again, much of the consideration depends on what you plan to do after the transaction.
And- I’ll tell you why getting this right will set up your business empire for years to come.

#businessbroker #bizbroker #businessbrokers #smallbusiness #mergersandacquisitions #smallbiz #entrepreneurship #entrepreneur #buyabusiness #sizeofbusiness #targetEBITDA

[DigitalGrowthTree]

Such solid wisdom in this video, thanks Dave!

[seanlee]

This is the video I’ve been looking for! Your channel just has everything I want to learn. A true gold mine.

[digital]

Very helpful info. I am coming from the multi family world and wanting to transition to a small business owner and the way you break things down is so clear and concise. Thanks DAvid

[jamesmack]

Hi dave: I have one general serious question, it is this: Is investing all your money in one small business a good idea for anyone who isn't already very rich?

A first rule of investing is to diversify your investments. It is without a doubt a very good rule.

So should anyone sink most of their time and money into one business? That would seem like a very bad life plan. You may make a lot of money but you may very well get cratered and live under a bridge. If you invest all your money in one risky business such an outcome seems very possible.

Age and your family sitch count of course. If you are young and the business craters you could go bankrupt and maybe make some kind of a recovery. But in reality few people recover from that kind of a failure.

What are your honest thoughts on this?

[TylerWehrung]

This was helpful, but I think you could create another video truly answering the right size business for a particular goal, not buying too small of business, etc. but I think this video was more of just not over leveraging when buying a business.

[aantix]

So he has 3 million in real estate, another $700K in cash and lines of credit. Excluding the lines of credit (assume 500K cash), he has a 3.5 million net worth.

For any acquisition above 3.5 million, he's betting "every nickel" that he has. Any loan will require a PG.

The better question is - when or is it ever appropriate to use leverage for a business acquisition?

If he's willing to acquire a business at 3.5 million, is it appropriate to use leverage and buy a business at 5 or even 7 million (SBA w/ seller's note)?

If the business fails, you're most certainly bankrupt. Is there any material difference between discharging 3.5 million worth of debt vs 7 million? And if not, why not take the bigger swing?

Would love to hear your take David. Thank you for the great content.

[brixx]

Do i need an llc to buy and sell businesses