What to quit job and start a business 100-150k

[Izzie]

Hi Folks

I'm 36 I have worked all my life in a public sector role only earn £22500 before tax..I worked out I pick up £362 a week so about £72 a day. There has to be a way I can work for myself and earn more than this. I have 100k to 150k to start a business but have not idea what I could do. Sick and tired of working in local government. Half way through reading rich dad poor dad.....life changer!

Any ideas? I'm open to suggestion.

Izzie

 

[STDFR33]

If you don't have any idea yourself, that £100-150k will soon disappear.

 

[Clinton]

As @The Accountancy Lab says, you're more likely to lose money than make it if this is your first foray into business. The stats are bleak - most new businesses fail within the first couple of years or so. And that applies even if you've got an idea that you believe is a killer idea.

A better use of your money would be to invest in a proven business - one with a history of profit. Given the budget you have, and your willingness to work full time in the business, you should be able to clear at least £50K - £100K a year in net earnings. There is no shortage of profitable one-man bands desperately looking for a buyer.

Buying a business presents less risk, but only if you have the right advice in choosing a business, doing the due diligence on it, negotiating the deal and drawing up the contracts. You need someone on side to guide you, look afer your interests (e.g push for a longer handover period so you can learn the ropes from the previous owners) etc.

I've bought many businesses and written extensively about buying businesses. Drop me a note if you have specific questions and I could link you directly to articles I've written on the subject.

 

[Izzie]

Thanks for your advice Clinton and Accountancy Lab. How can you tell if the business that's for sale is generally profitable? Why would someone sell a profitable business? or not pass it on to their children? I have been looking at businesses for sale on the Daltons website. Lots charge a substantial amount for leases. I have a good work ethic so I am willing to work for that 50 to 100k profit.

 

[STDFR33]

Why would someone sell a profitable business? that 50 to 100k profit.

1. Retirement
2. Travelling
3. Taken an employed position.
4. Ill health
5. Have other business interests and they see one or more of their businesses too much hassle (but would suit someone else).

There could be lots of reasons ...

 

[Izzie]

Ok Clinton. So what's your sugggestions. How do I proceed?

 

[Izzie]

Also do I need to spend 100 to 150k of my life saving.

 

[Clinton]

Thanks for your advice Clinton and Accountancy Lab. How can you tell if the business that's for sale is generally profitable? Why would someone sell a profitable business? or not pass it on to their children? I have been looking at businesses for sale on the Daltons website. Lots charge a substantial amount for leases. I have a good work ethic so I am willing to work for that 50 to 100k profit.

How to tell if a business is profitable? It isn't easy. What is easy is for unscrupulous business owners to make it appear like their business is profitable. That's why you need expert advice.

Some of the main ways profits are manipulated:
1. Paying for expenses - whether advertising or salaries - out of private funds and not including these in the business accounts. This reduces expenses, makes profit look bigger.
2. Sales to related parties - i.e. bumping up sales and profitability by doing sweetheart deals with other businesses in which the owners have interest
3. Selling lots of goods/services, on credit, to parties who are never going to pay. This pushes up profit but also pushes up accounts receiveable (debtors) in the balance sheet. The additional drawback for you here is that the assets in the B/S - another component of business valuation - is artificially inflated.

There are a million ways to scam an unwary buyer!

Children usually aren't interested in continuing the business. This is particularly so for the smaller businesses (under £1m). I know of a one-man band blind fitting business in the SE that's making well over £100K a year whose owner wants to emmigrate back to his home country. His only kid is 10 years old. The last I heard he was even willing to part-finance the deal (take 50% of the agreed price at some point in the future rather than requiring it all paid upfront). At the other end of the children scale - I know a of a lovely little deli in Yorkshire you'll be able to afford; it makes £50K a year with the owners working part-time. The Deli is in a nice area with 4 bedroom houses costing £70K and multiple Ofsted outstanding schools! The owners' kids have long since grown up, moved out and have their own careers.

No, you don't need to spend your entire savings. In fact, you definitely shouldn't blow our entire savings on one deal! You should keep some money for working capital and to make changes/improvements to the business.

I'm fully booked up and can't take on assisting you with finding a business, doing the DD, negotiating the deal and advising you all through, but send me a DM and I'll be willing to give you a free, short phone consultancy where I could share some tips.

 

[ethical PR]

Hi @Izzie

I was interested in your post as I started off in local government over twenty years ago - as a fresh graduate in a fairly junior role, earning just under what you are earning now - having worked in local government for at least fifteen years.

Within six years I had worked my way up to be a head of service managing a thirty person team and multi-million pound budget, with a salary substantially higher than yours when I left.

If you have entrepreneurial skills and acumen, I am wondering why at the age of 36 you are on such a low salary/role?.

Why do you feel you could earn more running your own business? What skills set do you have to do this for example finance, marketing, project management, sales, people management.

Do you have a particular skill set that is in high demand for example as a coder or a plumber?

As always your starting point should be to research your market and identify what services or products is there a high demand for and whether you have the skills and knowledge to fill the gap.

You may need to go and work for someone else to develop your skills/help you understand how to run a business.

Also look at going on courses to help you develop the skills you need to run a business.

Only then should you look at investing in your own.

I would be concerned about your trying to buy into a business when from what you have said you don't seem to have experience of running your own.

Of course if you have skills such as a plumber, gardener or sparky you could try setting up a sole trader and running your own outfit for a couple of years to get some experience before looking at something more substantial.

Remember you will be responsible for holidays, pensions, tax, NI, training, promotion and marketing, legal requirements, finance etc.

 

[DontAsk]

You can make a small fortune by running your own business.

The trouble is you sometimes need to start with a large fortune.

Seriously, If you need to ask on here then I don't think it's a viable idea. If I was that desperate I would be looking at a franchise, as well as other options. It needs to be something you are capable of (physically and intellectually) and preferably passionate about. Only you can determine that.

 

[Izzie]

DontAsk......what's viable then?

 

[DontAsk]

Only you can answer that by looking at your interests and skills.

 

[Izzie]

@ethicalPR I work in the probation service, thought I could make a difference the next salary scale is £29,500 not a great increase. I don't wish to work in such an environment with so much scrunity and paperwork for little reward. Your response sums up exactly what a government employee would say...more courses, more experience more training....thanks but no thanks.

Yes im on a low wage at 36 but I've got 150k to play with and can now do something which will make me more money

If people from India or other migrants took your advice they wouldn't be the millionaires they are now. I wanna make money I wanna work for myself that's my goal and I will try to achieve it.

 

[Clinton]

If I was that desperate I would be looking at a franchise, as well as other options.

Contrary to popular belief, new franchises are not less risky, they are more so.

New franchise business fail at a higher rate than new non-franchise businesses.

I don't have a link to all the stats I've read over time, but I believe part of the reason that new franchises have such a high failure rate is ... the hard selling of these business opportunities by franchisors. They are attracting lots of unsuitable people to business, giving them false hopes, and not disclosing the true picture of the hard work and sacrifices required to build a business. Very few of these newbies have the savvy to do proper research before jumping in and most end up losing money and closing shop.

 

[Izzie]

All this talk makes having a standard 9 to 5 job the easier and safe option but will it bring the rewards...maybe not. Like you say I don't need to invest all or any of my money. Best start small.

 

[ChrisRM]

I sense the frustration with the 9-5 and 'working for the man'. Most here have those same feelings I suspect.

I agree with the sentiment of others, running a successful business is hard. You don't just start a business, you find something that you can do that helps other people. You need to remove a 'pain' from peoples lives/businesses ('it takes too long to do x', 'I don't know how to do y', 'if only I had z'). Then you make a business of it. It takes failure, numerous times, in many shapes and forms to succeed.

As a suggestion to your problem, why not try 'moonlighting'? Start a 'business' and work on it during evenings and weekends. Learn about what sort of business you want (/how you can help people), how to choose a name, make a website, get a logo, get customers, etc, without taking a huge risk. If you fail, then you haven't lost savings and have the comfort of the 9-5 income.

If/when have a reasonable income from the moonlighting business (and kept your savings) then you can quit the job and work on the business full time.

What skills do you have or product you could sell that could help people?

 

[Izzie]

Thanks for your positive contribution Chris and Clinton. Yes I don't want to lose my savings it's all I have.

I live in south west and was thinking of buying summer houses/log cabins, buying some land or renting it then renting the summer houses out to people. I would make money over summer period and low season too. So essentially a tourist business

 

[ethical PR]

@ethicalPR I work in the probation service, thought I could make a difference the next salary scale is £29,500 not a great increase. I don't wish to work in such an environment with so much scrunity and paperwork for little reward. Your response sums up exactly what a government employee would say...more courses, more experience more training....thanks but no thanks.

Yes im on a low wage at 36 but I've got 150k to play with and can now do something which will make me more money

If people from India or other migrants took your advice they wouldn't be the millionaires they are now. I wanna make money I wanna work for myself that's my goal and I will try to achieve it.

Actually my response has nothing to do with being a former local government employee and everything to do with having successfully set up and run my own business employing 10 staff for over ten years . I developed a nationally recognised, award winning business.

You came on here for advice and we are trying to help you but you provide little information in terms of what sort of business you want to run.

I suggested working for someone else in the sector you want to go into and doing business courses alongside this, because it is a great way to get the experience you need. Many small businesses fail because although someone might be a great baker, sparky, landscaper or designer they haven't got the basic know how to run a business.

Coming from an immigrant family I can tell you that one of the reasons they succeed in retail, hospitality etc is that they are often able to rely on a network of family members willing to work for free or very little and that they share resources, skills and expertise. This can make all the difference. This also happens with UK born families.

So lets try again.

1. What sort of business do you want to set up
2. What research have you done on whether there is a market for your business
3. What research have you done on what support is available locally in terms of training, grants, subsidised business space
4. Do you have the skills and knowledge to run your own business ie marketing, finance, management or do you need some training to develop those skills. Do you have the skills to provide/offer the services or products you want to sell
5. How will you market this business

Having a relatively small amount of money to invest in setting one up will in itself not lead to success. If you want to make money and work for yourself these are the issues you need to look at.

 

[DontAsk]

It takes failure, numerous times, in many shapes and forms to succeed.

Have to disagree with that.

As a suggestion to your problem, why not try 'moonlighting'? Start a 'business' and work on it during evenings and weekends. Learn about what sort of business you want (/how you can help people), how to choose a name, make a website, get a logo, get customers, etc, without taking a huge risk.

That's exactly what I did. I don't want to go into details but it is now a globally recognised brand with 2/3 of products exported (only the Arctic and Antarctica left to crack), No. 5 on Google search and three of the top four link to us (and I have never paid for any SEO, adwords or whatever BS). It's very much a niche so I am not going to be the next James Dyson, but it has paid off the mortgage and would fund quite comfortable early retirement if my other half weren't too wedded to my day job salary

 

[Kiwi1234]

It's very likely not a good idea to buy someone's business, spending all your money. If you're new, understand an industry with a smaller business, invest less, use money to learn. Then once you're confident you can lead a larger business then buy one. If you buy one without any experience it will probably fall off a cliff pretty quick. Your staff won't be confident in your ability if you have no idea what you're doing. It is silly to just chase money but forget you actually need to know what you're doing.

I'm 17 years old, maybe my opinion isn't valid, as I haven't had personal experience of it happening (falling off a cliff but I do have experience in business). But from what I've heard, I think it is logical. Why do you think businesses only employ people with experience? Same reason, they can do the job with experience - you can't if you have no experience. Learn first.

 

[ChrisRM]

Have to disagree with that.

Just to clarify, I don't necessarily mean failure of the whole business.

But failure in marketing methods. Failure in closing a sale. Failure in getting your site to rank. Failure in that typo/overlooked copy and paste in that quote. Failure in a new product/service. Etc.

Some big, some small. But little failures that knock the confidence sometimes and raise the ugly head of the 'imposter syndrome' or doubt the reason why you're doing this.

Congrats on the success of your product, financially and as a status (international). Must be nice knowing you could walk away from the job without fear of loosing the roof over your head.

I know a bit about SEO and could provide some pointers if you did want to try and get above the others. SEO is misunderstood, often misleadingly sold, but it can help bring in sales naturally.

 

[Mitch3473]

Thanks for your positive contribution Chris and Clinton. Yes I don't want to lose my savings it's all I have.

I live in south west and was thinking of buying summer houses/log cabins, buying some land or renting it then renting the summer houses out to people. I would make money over summer period and low season too. So essentially a tourist business

Do you live in a tourist area and if so would you be planning to work within said industry. Serious question.

 

[Izzie]

I live in an area in the southwest. Yes I would work in said industry. Why?

 

[Chris Ashdown]

My suggestion is first find some items to buy be they new or secondhand but only in near perfect condition
Advertise them on ebay and see how it goes try a few more items, If you make a good % profit after all costs then grow it and your learning many skills whilst sat a home and still have a day job

You will soon be full of idea's and have the ability to run a small company

 

[webgeek]

Buy a couple fixer upper properties, slap on a coat of paint then rent. Use them as security to buy 2 more and do the same. Rinse, lather, repeat.

You'll get 12% or so return on the book value of each as you build a property portfolio to retire on.

After you figure out how to do this well - hire someone else to do the paint slapping and you can focus on buying properties.

If not that, then try selling Flymo's in USA - there's a massive untapped market just waiting for ya

Tourist business is too economy dependent - a high risk during times of Brexit. Stick with real family homes/flats.

 

[Mitch3473]

I live in an area in the southwest. Yes I would work in said industry. Why?

PM sent.

 

[MASSEY]

How much you can make depends upon how much risk you wish to take.

In my opinion, i'd say you should probably reserve 50K for yourself, emergency money. A sizeable sum so you're never poor.

Then as for the remaining 100k..i think suggestions of being able to invest that hundred k and start making 50k a year from it etc, in simple businesses? For someone whose been working in a council office for probably most of their career, all sound a bit to good to be true to me. And they might take 7 14 hr days a week to make that lol.

If i was you, and didn't know much, i'd probably split the hundred k between two companies, and look to get a return of 15-20 percent a year, then you could keep your simple job, or move on to another simple job, and boost your income that way?

 

[Bookmemate]

Research cryptocurrencies like Ethereum, Decred, NEM, Monero, choose the ones you like/think will succeed, then invest as much as you can afford to lose.

I would stay away from Bitcoin (despite it having the highest market cap and value vs USD) due to the internal issues there.

In a few years you could be a multi-millionaire chilling out on a private island, or you could have lost it all.

Alternatively with a 2k investment in a 6xGPU mining rig you could be making about 13 quid per day just using your computing power to solve the algorithms that support the Ethereum network. Put in 10k and you've got an income of about 65quid per day, just under 2k per month, so over a year slightly above your net income now. There is also the assumption that the value of Ethereum will rise vs fiat currency in the coming months/years - you'll need to research that to decide for yourself though as it is speculation.

Worth noting that your cryptocurrency earnings wouldn't be taxable until you switch them to fiat currency.

 

[Mitch3473]

Buy a couple fixer upper properties, slap on a coat of paint then rent. Use them as security to buy 2 more and do the same. Rinse, lather, repeat.

You'll get 12% or so return on the book value of each as you build a property portfolio to retire on.

After you figure out how to do this well - hire someone else to do the paint slapping and you can focus on buying properties.

If not that, then try selling Flymo's in USA - there's a massive untapped market just waiting for ya

Tourist business is too economy dependent - a high risk during times of Brexit. Stick with real family homes/flats.

Slightly off on a tangent but I'm Interested to know why you think the tourist industry in this country is a high risk during Brexit

 

[webgeek]

The tourist industry is sensitive to economic pressures. It's one of those expenses that people reduce or forego when times are tough, money is tight or the their job is insecure.

 

[Pish_Pash]

I started out with exactly £50k about 4 years ago.

My net profits is now into six figures ....& I have been growing at between 30-40% per annum each year.

Being candid, it's been a real slog - I'm more than a little worn out (& somewhat related - I now have severe marriage diffs...so I no longer want to work as hard as I have been for an ungrateful Ex!) ...so recently I've been turning my thoughts to mulling selling .... but apparently early indications are nobody would want to buy a business such as mine! (owner dependent)

So, IMHO there are most definitely *great* (& honest) businesses out there...but I doubt you'd be able snag one that's going to earn you £100k plus per annum for a £100k outlay.

incidentally, if I were to buy a business off anyone, before handing over my hard earned I'd insist that I could spend some time working alongside to get a feel for the business (& inspecting things - if it's an online business see the sales coming through from the likes of Ebay/Amazon, own website etc)) ...just to make sure that all is on order - if the business is legitimate, then I can't imagine any decent/honest business owner refusing - if they do - there's your warning sign...walk away!

re Rich Dad, Poor Dad ...I enjoyed the book, it wasn't a life changer for me...the basic premise of the book is to use your dosh to buy income generating assets, not disposables (holidays, meals, TVs etc.)....nothing revelatory for me there ......also, from recollection the author had made his money from real estate (buying up a block of down at heel apartments etc) ....much harder to do when property is still at all time highs nowadays.

 

[Clinton]

I wouldn't say there are absolutely no buyers for a one-man band. But, yes, OMBs are difficult to sell and don't attract the type of prices they would otherwise attract. You deserve credit for building your business to its current position and there may be other ways of extracting value ... especially if you don't need to see the entire reward on day one.

I've give you an example. In your other thread, I advised that the two factors working against you are the lack of liquidity (DLOM) that's a feature of all small business ownership and ... the KPD or key person discount. Each of these negatives devalues your business by a large sum. However, there is a way you can completely eliminate both of them from the equation and benefit from the higher price you'd get as a result. Of course to do that you need to make a sacrifice or two.

Let me illustrate: you could sell 100% of the equity to a competitor in exchange for no cash i.e. you take all your payment in shares in this competitor company. As this "buyer" is a competitor they already understand the industry and your business so your personal knowledge/skill is not so important. No (or very little) KPD is involved here. As you are not taking payment in cash but are taking on the lack of liquidity (your competitor's shares as just as illiquid as your own), that removes the DLOM as well.

Such an arrangement allows you to continue to share in the growth of your business but at the expense of not having the liquidity. It relieves you of responsibility and frees your time, but doesn't immediately release your cash.

That's just one example. But do not jump into any such arrangement. There are many things that can go wrong. You'll need expert advice and assistance to protect your interests through such a transaction or you will get badly burnt.

if it's an online business see the sales coming through from the likes of Ebay/Amazon, own website etc)) ...just to make sure that all is on order - if the business is legitimate, then I can't imagine any decent/honest business owner refusing - if they do - there's your warning sign...walk away!

Any business owner I am advising would point blank refuse such access. You could be a competitor looking to steal secrets, or someone looking to start his own business and nosying around to get ideas and tips! You'll get such access only after signing Heads of Terms i.e. agreeing price etc.

Besides, sales coming through proves nothing! The seller could be using private funds to secretly pay tens of thousands for marketing. So you'll see the sales but won't see the expense involved in acquiring those sales.

Due diligence is a lot more complicated than sittting in on the business for a few days to monitor sales! I've written hundreds of pages of advice on this starting circa 2005. You could begin at this page of mine if you want to research how to do DD on an online business.

 

[Pish_Pash]

Thanks Clinton - very useful.

For an online business, there's no better litmus test than sitting alongside the business owner & seeing those orders come in. If I had a potential buyer & they wanted to do so.....that's fine. It's not as if I'm going to advertise "Business for sale" take an enquiry & then have him sit alongside me the next day...what I meant was late in the negotiations, before contracts are signed, that some form of validation is done ...& you can't fake Amazon sales & Ebay sales orders arriving to any large extent.

You deserve credit for building your business to its current position

Thanks...in that one brief sentence you've actually given me more praise than my unsupportive wife has in the past 4 years - hah! (which is why I now have my eye on the exit). Anyway, we're in danger of hijacking the thread so I'll get me coat...

 

[Mitch3473]

The tourist industry is sensitive to economic pressures. It's one of those expenses that people reduce or forego when times are tough, money is tight or the their job is insecure.

Got to love the default Brexit excuses.....I'm a service provider directly into the tourist trade and am currently offloading clients and turning new ones away. My excisting clients are reporting increases up to 30%, forecasts predict a 4% increase in inbound trade ( from £36b to £38b ) We're already up 25% on last year during the 2 quietist months. What we have found though is more people are taking shorter but more frequent breaks, factor in the £/€ and the £/$ and the the UK tourist industry is doing just fine.

 

[webgeek]

@Mitch3473 - tell us how you did during the banking crisis of 2008?

The tourist industry collapsed.

Play it off however you like, but tourism as a form of housing will not outperform traditional single family homes during times of economic uncertainty. If they do, it's a fluke.

Personally, I wouldn't want to bet my kids lunch money on a fluke (long shot) - it's just silly to do so when you know that single family homes are in such demand.

Check the 2010 report entitled "The global recession and its impact on tourists’ spending in the UK". That may enlighten you as to how tourism did during that period...

 

[Will Blears]

If I were you, I'd quit my job, pay myself the same salary and give myself two years to to hit £100,000 a year from affiliate marketing.

With Affiliate Marketing you can be location independent and earn a passive income whilst also building a business which is an asset that can be sold. Not only this, but the barriers to entry are very low and the initial funds needed to start the business are also extremely low.

The unfortunate thing is that most people who start affiliate marketing fail, they either lose focus, motivation or simply do not understand how to do it and fail to learn.

 

[Mitch3473]

@Mitch3473 - tell us how you did during the banking crisis of 2008?

The tourist industry collapsed.

Play it off however you like, but tourism as a form of housing will not outperform traditional single family homes during times of economic uncertainty. If they do, it's a fluke.

Personally, I wouldn't want to bet my kids lunch money on a fluke (long shot) - it's just silly to do so when you know that single family homes are in such demand.

Check the 2010 report entitled "The global recession and its impact on tourists’ spending in the UK". That may enlighten you as to how tourism did during that period...

To be honest I did Ok, more down to good luck than good management. Had just sold 6 UK properties a few months before it happened. As for the 2010 report, that's history and was of no interest to me as I was living abroad by then and had nothing at all to do with UK tourism at the time. Only been involved in UK tourism since 2013.

 

[webgeek]

I'll take luck over skill any day

 

[Mitch3473]

When you have a skill set like mine, you have to.....

 

[webgeek]

LOL, niiice.