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[Topkwak]

Hello UKBF

I've not been on here for a few years...selfishly I'm back to pick your brains

I run a one-man band consultancy, occasionally using freelancers and have come to a crossroads.

The Ltd business is in its third full year has had a strong year compared to years 1 and 2 and I'm planning what to do next. There is £70k sitting in the business which can be re-invested into the business, taken out via dividend or a bit of both. Options:

1. Continue as is and be the business, not scale and try and earn a decent (for me) salary/divi each year (max ISA etc.)
2. Take on some risk by employing someone and hope the work keeps on coming in and leverage an employee to grow (E-myth style)
3. I have an offer on the table to join another business in the same industry with 5-10% equity but will become an employee again and tied in for 5 years at least. Their business is younger than mine but has had good traction and led by some good people
4. Take dividend and start a new business/buy a business (ideally with business partner)

Aware that a variety of factors will determine which route is best, but would be interested to know if anyone has had experience scaling a service business such as a consultancy?

Alternatively, does anyone has experience buying an established business with c.£50k-£100k profit? I've seen a few businesses for sale which are run by staff, not the vendors (a few questions to current owners if not DD will tell if that's actually true), but I like the thought of buying a few smaller regional companies in fragmented markets to make a larger business. I appreciate this will take a lot of work but why not

A bit of a ramble but any thoughts, advice and experience is very welcome.

Cheers

 

[blueprinthub.co.uk]

Hello UKBF

I've not been on here for a few years...selfishly I'm back to pick your brains

I run a one-man band consultancy, occasionally using freelancers and have come to a crossroads.

The Ltd business is in its third full year has had a strong year compared to years 1 and 2 and I'm planning what to do next. There is £70k sitting in the business which can be re-invested into the business, taken out via dividend or a bit of both. Options:

1. Continue as is and be the business, not scale and try and earn a decent (for me) salary/divi each year (max ISA etc.)
2. Take on some risk by employing someone and hope the work keeps on coming in and leverage an employee to grow (E-myth style)
3. I have an offer on the table to join another business in the same industry with 5-10% equity but will become an employee again and tied in for 5 years at least. Their business is younger than mine but has had good traction and led by some good people
4. Take dividend and start a new business/buy a business (ideally with business partner)

Aware that a variety of factors will determine which route is best, but would be interested to know if anyone has had experience scaling a service business such as a consultancy?

Alternatively, does anyone has experience buying an established business with c.£50k-£100k profit? I've seen a few businesses for sale which are run by staff, not the vendors (a few questions to current owners if not DD will tell if that's actually true), but I like the thought of buying a few smaller regional companies in fragmented markets to make a larger business. I appreciate this will take a lot of work but why not

A bit of a ramble but any thoughts, advice and experience is very welcome.

Cheers

Hey

My honest personal thoughts on each of your point:

1. Depending on what you pay yourself now and how much you would raise it, the money in the bank could be a nice cushion for the business, especially if it's debt free.
Nothing wrong with having some money in the bank for a rainy day in my opinion.

2. Leveraging an employee to grow generally only works if the employee adds something to the existing business that isn't there currently. For example do they have expertise in a specialist area, enabling you to offer broader services than you were able to before?
If they can't add anything new, they'll effectively be taking work off your own hands so you can concentrate on something else. If you're not absolutely and completely being pushed to the limit now, then you may want to think very hard about this.

3. I can tell you don't want to be an employee, and that you don't want to be tied in.

4. Don't take a dividend and buy the business, because you'll pay corp tax on the dividend (minus ent relief if available).

If it's a one man band consulting service, I'm guessing the working capital isn't too high.
Again, nice to have a safety cushion.

But my preference would be to remain independent and grow through acquisition.

My tuppence.
Get your business to invest in the new one.

 

[JEREMY HAWKE]

I would keep your business going It is right to exercise caution over taking somebody on

Most importantly I think if the business is in profit and not owing anything You should take some money out for yourself you deserve it

If you do this it mighjt help you to realize your in a good postion as you are now