Posted by u/career_switcher_38
Buy a service business or start one from scratch?
Answered by Ask a Shop Owner ·
$150k saved, want to own a service business. Buy an existing one or start fresh?
u/askashopowner Owner-operator advisor
Top answer
Buy, if you can find a healthy one. Cash-flowing businesses in the $150k to $500k range sell for 2x to 3.5x SDE. You get customers, systems, staff, and reputation on day one. Starting from zero, year one is almost always a loss.
The catch: 80% of listed small businesses are junk. Declining revenue, undocumented cash, one big client leaving. Get a broker, get an accountant to look at three years of tax returns (not P&Ls the seller made), and walk from any deal where the seller will not do a 60-day transition.
SBA 7(a) can finance up to 90% of the purchase. Your $150k becomes a $1M to $1.5M acquisition. That is a much bigger starting position than $150k in equipment.
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