Yes, it is. One of the most powerful aspects of buying and selling businesses on the Flippa marketplace is control. When you safely purchase an established business on the marketplace through Flippa you’ve gained control of your financial future. This can be done in many different capacities and one more recent addition to the Flippa homepage has been the “Buy Your Next Job” section. This is comprised of established online businesses that generate enough revenue annually to support 1 to 2 employees including yourself.
There are both upsides and downsides to buying your next job but in my experience, there are much more positives to running your own business in a niche you’re passionate about than negatives.
The Challenges with Buying Your Next Job
First, we can explore the challenges of buying your next job. All businesses live and die by their balance sheet. Keeping track of expenses and cash on hand is a key component to sustaining a long-term business. Learning the basics about managing your balance sheet as well as your profit and loss statements before buying an established online business is extremely important.
I’d suggest making sure that you can manage 90% of the business yourself and there is enough profit being made with some room to spare. Taking a salary out of a business is often a difficult choice for many entrepreneurs given that re-investing into the businesses growth can generate more revenue. However, if you’re not able to support yourself and/or your family, the business likely wouldn’t be operating in the first place, so in my experience, it’s always pay yourself first. I’ve made the mistake of re-investing what would have been my salary back into the business and noticed that it can have drastic effects mentally. While business growth is sincerely important, your own mental health and well-being is always number one.
Many readers here on Flippa have run online businesses both large and small. Everyone knows it is a significant mental challenge day in and day out. Taking risks and pushing yourself constantly to try new strategies to improve the business is extremely difficult, so making sure you’ve covered your own income needs to be a priority when considering buying your job rather than applying for a job.
Building a business with the intent to support you and your team is wildly under represented. In my 20s, while starting a company, I slept on friends’ floors in Boston, New York, and San Francisco as I worked day and night to get the business up and running along with my co-founders. We were re-investing every cent that we made back into the business to help it grow. It was possible back then, given our low overhead, but it didn’t prepare us to construct a business that was self-sustaining.
How Much Should I Pay Myself?
I’ve encountered a lot of fellow entrepreneurs that have run into this question over the years and everyone seems to have mixed feelings on the answer. During the building stage, there is no right answer on how much money should be taken out of the business and paid to yourself and your team. Most investors are going to say the founders need to re-invest everything into the business to make it a success as their incentives are to get a return on their investment. However, I have been fortunate enough to work with multiple investors that took the opposite approach – requesting founders take a salary and focus on their health. This approach removes the basic stress of covering your needs financially and can allow builders to build with clear minds, ultimately making the business successful. Everyone you talk to that operates a business will share a different approach to early salary but in context of buying your next job, it is what’s expected.
Invest In Yourself – Learn A New Skill
It’s important when buying a job to realize that you aren’t only looking for financial gain, but also for personal growth and development. While writing this very article, unemployment has spiked to over 15 million claims in the US in March and April of 2020 with the COVID19 pandemic sweeping the world. Globally, everyone is indoors, trying to prevent the spread of the virus which has subsequently skyrocketed specific online businesses while bankrupting many others. With uncertainty in jobs worldwide, buying cash flow by becoming an online business owner is more important than ever.
During downturns like the one we are currently experiencing, the best thing to do is learn new skills. Given that everyone is effected by this pandemic, leaving us indoors, without many of our usual hobbies, it’s a relatively easy time to get started.
Head to YouTube and learning how to code, design, write, analyze, produce, or undertake any part of a business. With the gig economy on sites like Upwork and Fiverr there are plenty of companies hiring daily for all different skillsets and really fine tuning your craft is valuable long-term asset. I recommend learning a new skill and then checking on the Flippa marketplace for a business in the niche in which you’ve decided to adapt.
How To Finance The Purchase Of Your Own Job
If you’ve taken this approach, when an established business comes up for sale on Flippa, you can consider buying the business in a few different ways:
- Leverage an SBA loan available through the Flippa and Guardian partnership
- Seller financing with the owner
I recommend checking seller financing as an option first, not only because its financially beneficial but because it shows confidence. When a seller is willing to take 50% upfront and have the buyer pay the remaining 50% over time from the businesses profit, it shows they believe in the business. There are a lot of sellers who provide support, but through seller financing you can truly align incentives and de-risk your investment dramatically.
Overall, buying a job that is making the equivalent of your current salary sounds like a great idea, but as I mentioned earlier, you must do your research.
Knowing that there are many costs associated with all online businesses, understanding that the profit margin needs to be where you pull your salary from is vital. If you are currently making $100k per year and buy a business that’s making $100k per year, it’s not going to be equal. Taking into account the type of business and the costs to operate it, you could be looking at between a $25k to $50k salary if you’re taking from the profit of the established business – making the jump from your full time, $100k salary job, a rather dramatic haircut.
However, that said, working for yourself and being in control of your destiny, with your own business, in my opinion, doesn’t have a price tag. This would be a fundamental life changing move for a new business owner and I highly recommend keeping your salaried job while you purchase the business and ease into its day to day operations. Once comfortable and in love with the business take it on full time and enjoy!
To help you get started, here is saved search that Flippa has created to help you out.