Fact Or Fiction: 100% Absentee Business Ownership Is A Viable Option For Business Buyers
It is every business buyer’s dream to find an absentee ownership business that requires little to no work and makes a lot of money. After all, who wouldn’t want to make hundreds of thousands of dollars without having to invest any time toward running their own business?
While this sounds great in theory, it is, in the majority of cases, too good to be true. The truth is, no matter what kind of business you are hoping to purchase, there is no way around some form of oversight, decision making or time commitment.
For those who are trying to buy a business as an investment to make money without any future involvement, this idea is commonly coupled with the idea that a qualified and experienced manager can be hired to run the day-to-day operations and make the important decisions.
The problem with hiring a manager to act in place of the owner is that qualified managers who are tasked with a lot of responsibilities will have to be compensated accordingly. This level of compensation will overwhelmingly eat into the very profits that the owner was hoping to acquire in their new business purchase, often discouraging the potential buyer from buying the business altogether.
Buyers who find businesses advertised as absentee or semi-absentee ownership should be prepared to dive deep into the business during due diligence to ensure this the business is actually as advertised. Even “semi-absentee ownership” businesses that appear to only require a few hours of owner involvement per week will often require a much larger time commitment than buyers will see on the surface.
Potential business buyers who are expecting or hoping for varying levels of absentee ownership with the purchase of a small business must understand that most successful and profitable small businesses require a “hands on” approach from their owner.
Owning and operating a small business, in most cases, is a full-time job, and buyers should realize that the majority of small business owners are actually full-time managers as well. Truly absentee ownership is not completely unheard of, but it should not be expected by every business buyer.
If you are hoping to purchase a small business and not have any level of involvement with that business, you should consider another career because small businesses are a lot of work.