Buying a Job

Quit your job. Buy a business that already makes money. Let the bank lend you most of the price. Own, don’t be owned.

The pitch is everywhere, and some of it is true: a minority of owners do very well. Buying a Job asks the question the pitch skips: what does the business pay the person who runs it?

The numbers are public and plain. A third of sole proprietors report no net income at all. The price of a small business is set on earnings that include the owner’s own wage. The loan is guaranteed with your house. Run through the arithmetic, the median purchase pays its owner about what he could earn managing the same kind of business for someone else.

For thirty years Walt Haugen did the books of small-business owners in northeast Iowa. Then he bought two franchise restaurants himself, and sold them twelve years later for less than he paid. This is the sum he should have done first, with a worksheet you can fill in before you sign.

Most buyers buy a job. Do the sum first.