How to Buy a Business as an Investment

So You Wanna Buy a Business, Huh?

Let me guess—you’ve got a little itch.

Maybe it started while sitting through one too many pointless Zoom calls. Or maybe it hit you during a weekend BBQ, chatting with a buddy who “just bought into this detailing shop,” and now he’s casually pulling in six figures without breaking a sweat.

Whatever lit the match, here you are… kicking around the idea of buying a business as an investment.

Let me tell you what I wish someone had told me before I got into this game: it’s not like buying a rental property. It’s weirder. Messier. More personal. But—done right—it can be wildly profitable and just about the most interesting way to diversify your portfolio.

So grab your coffee (or whiskey, I won’t judge), and let me walk you through how I learned to buy a business without torpedoing my bank account… or my sanity.

Why Buying a Business Can Be a Smart Investment

A lot of folks are obsessed with stocks and real estate—and hey, I get it. Those asset classes have entire fan clubs. But businesses? They’re the underdog. And I love an underdog.

Here’s why:

• Cash Flow Starts Day One: You’re not crossing your fingers for appreciation. If you buy a decent business, you’re making money from the jump.

• Control Freaks Rejoice: Unlike stocks, you can actually influence how well this investment performs.

• Tax Benefits Galore: If you structure it right, Uncle Sam ends up being your silent (and generous) partner.

Of course, if you screw it up, it’s also a fast track to waking up at 3am wondering why you own a failing dry cleaning chain in Des Moines. So let’s talk about how to avoid that.

Start With What You Don’t Want

Before you even peek at a listing, do yourself a favor and grab a notepad. Make two columns. Label one “Nope” and the other “Maybe.”

When I did this, I realized something crucial: I didn’t want to manage employees. I’d been there, done that, and wasn’t itching to relive the joys of surprise no-shows and passive-aggressive Slack messages.

So I scratched anything with a big team. That immediately took restaurants, salons, and retail stores off the board.

Your “Nope List” might look different. But trust me, this step saves you from chasing a shiny business that turns into a full-time job you didn’t want.

Where to Find the Good Deals (Spoiler: Not Always Online)

Sure, there are plenty of websites out there—BizBuySell, Flippa, Empire Flippers if you’re into digital stuff.

But here’s a little secret I picked up from an old-school investor I met at a poker game in Reno (true story): the best deals rarely hit the open market.

He called it “buying invisible inventory.”

Translation? Build relationships with brokers. Talk to local CPAs. Let your network know you’re looking. You’d be amazed how many tired owners are looking for a quiet exit but don’t want the hassle of listing publicly.

Also: pay attention to those scrappy little flyers posted in coffee shops. You know the ones. “Established cleaning route for sale. $48K. Serious inquiries only.” Sometimes that’s where the gold is hiding.

What to Look for in a Solid Investment Business

Let’s get into the meat.

Here’s my quick-and-dirty checklist after years of trial and error:

• Consistent Cash Flow: I want to see profit, not just revenue. Bonus points if the business makes money even when the owner’s on vacation.

• Simple Operations: If the business model requires a PhD and three full-time managers to stay afloat, I’m out.

• Loyal Customers: Recurring revenue is my love language.

• Owner Not the Business: If the current owner is the brand (think “Bob’s One-Man Roofing Show”), it’s a red flag. Hard to replace Bob.

• Clean Books: If the financials look like they were scribbled on a napkin in crayon, I walk.

I once almost bought a small printing company—looked great on the surface. But when I dug in, I realized 70% of the income came from one contract… with the owner’s cousin. Yeah. Hard pass.

Don’t Skip Due Diligence (Seriously, Don’t)

This is where people get lazy. And it’s also where they get wrecked.

Due diligence is like dating someone before moving in. You want to know what kind of skeletons are hiding in the closet—before you commit.

Here’s what you absolutely need to dig into:

• 2–3 years of financials (tax returns > profit & loss statements)

• Customer concentration

• Employee agreements and turnover rates

• Vendor contracts

• Any pending lawsuits or licensing issues

Oh—and for the love of all things holy, talk to customers and employees if you can. I once uncovered a major morale problem just from a 5-minute convo with the receptionist. Saved me from inheriting a dumpster fire.

Structure the Deal in Your Favor

Buying a business isn’t all cash up front. In fact, it shouldn’t be.

Get creative:

• Seller Financing: This keeps the seller invested in your success. And your bank account happy.

• Earnouts: Pay a portion of the price only if the business hits agreed-upon targets post-sale.

• Asset vs. Stock Purchase: Talk to a CPA about this—has big tax implications.

And remember: everything is negotiable. Price. Terms. Training. That weird 2007 company van with the busted A/C? Yep, even that.

Final Thoughts: You Don’t Need to Be a Genius—Just Curious and Cautious

If you’re still reading this, I’ll tell you straight: you’re ahead of 90% of the people who “talk” about buying a business but never do.

Yes, it’s scary. Yes, there’s risk. But with the right mindset—and a healthy dose of skepticism—you can absolutely make this work.

My first deal wasn’t pretty. It was a mobile car wash business, and the van broke down on day two. I considered lighting a match and walking away. But I stuck with it, learned the ropes, and turned that thing around.

Now? That scrappy little operation throws off more cash each month than a rental house would in a year. And I don’t even touch the hose anymore.

You don’t need to be perfect. You just need to be willing to learn, listen, and move fast when the right opportunity knocks.

So, are you ready?

Or are you just gonna keep scrolling listings while your latte gets cold?

Key Takeaways

• Start with your “Nope List” to avoid buying a business you’ll hate.

• Network quietly—off-market deals are often the best.

• Focus on simple businesses with steady cash flow and loyal customers.

• Dig deep during due diligence—ask dumb questions. They might save you.

• Negotiate creatively: use seller financing, earnouts, and asset purchases to protect yourself.

Still Thinking About It?
Bookmark this. Screenshot it. Whatever. But when that little voice pops back into your head whispering “I should buy a business…” you’ll know where to start.