The Wealth-Building Opportunity of Small Business Ownership in New York’s Capital Region

On behalf of The Wagoner Firm, I welcome all of you to the first installment of our four-part series exploring the landscape of small-to-mid-sized business purchase and sale transactions. We’ll take a deep dive into the complete journey—including the tremendous opportunity to create wealth for potential buyers, the benefits of business ownership, the process of acquiring a small business, the steps to get the most value for your business, the multiple ways to finance the acquisition, and finally, ways to ensure a successful transition.

Today, we begin by shining a light on the wealth-building opportunities offered by small business ownership, both for buyers and sellers.

THE BENEFITS OF BUYING A SMALL BUSINESS MAYBE BETTER THAN YOU THOUGHT

Most people face a crossroads at a certain point in their career. On one hand, they could stay in a job that they may or may not like but provides financial stability… On the other hand, they could venture into entrepreneurship, with no guaranteed income but boundless potential. For those venturing out on their own, there are generally two options: (1) start a new business, or (2) buy an existing one.

This series focuses on purchasing an existing business, which offers immediate income, support, and a customer base; additionally, not having to start from scratch may also lower the financial risk while still providing meaningful income. Buying an existing business can be easier to finance than most people recognize – there are plenty of banks and Small Business Administration financing options for existing businesses with cash flow and profits (which we will delve into later in the series). With those financing options demystified, it will become clear that buying a business is the optimal choice for most would-be entrepreneurs.

And there’s more good news: our region is full of hidden treasures in the form of exceptional businesses with owners looking to sell. Many have been in business for decades and are just looking to find the right buyer. These owners should take steps to prepare their business for the market, and the best practice is to plan several years out. This allows the owner to maximize value come sale time. After all, it is often their life’s work and can provide them with not just a comfortable lifestyle in retirement, but also a legitimate legacy.

A smart buyer would do well to match their interests and skills with those needed to successfully operate one of these businesses. Notably, we have seen plenty of adept buyers get into blue collar businesses like HVAC, plumbing, paving, and pool installation and service. Most had very little experience in these particular fields, but they did have sharp business minds, the ability to bring value to the target companies and – most significantly – experienced and committed employees that made their transitions successful.

These businesses immediately produced the cash flow which allowed the buyers to pay down financing while also providing strong earnings. With lower debt and increased revenues, they can see the value of their investment rising steadily. The results will provide the buyers with the opportunity to cash out in the future and create generational wealth.

THE POWER OF OWNING A SMALL BUSINESS

Owning a small business comes with multiple benefits… You get to call the shots, of course, but there’s more to it than that. A target business should already have good revenue and profit. This cashflow not only offers financial security from day one, but also provides the backbone for financing the acquisition through traditional bank financing, a Small Business Administration loan, seller financing, or a combination. Significantly, the revenue generated by these cash flowing small-to-mid-sized businesses can take startups years to achieve.

In the Capital Region, with a diverse range of businesses and strong local economy, newly minted small-business owners have a real opportunity to grow… In fact, many of the businesses for sale or coming up for sale operate in outdated ways – relying heavily on paper calendars and fax machines, avoiding any modern technology that could streamline their operations. Most readers would be surprised by how many business owners that began only 20 to 30 years ago have outdated ways of operating! Longtime owners may not want to change… For them, their businesses run the way they want.

New buyers are less resistant to these changes, and can often bring immediate value to these businesses. The addition of customer relationship management tools (CRMs), electronic billing platforms, and automations by a new owner can immediately reduce operational costs and make the business more efficient – and therefore, profitable. They are able to bring immediate value by modernizing operations, offering synergistic products or services, and expanding and developing operations. These changes often increase the satisfaction of their employees, who can focus on the things that matter most to the business rather than tasks rendered obsolete by widely used technology… The result? Faster growth in business equity and increased profits, leading to wealth accumulation.

HOW SELLERS STAND TO GAIN

For business owners thinking of selling, the process holds equal potential… Time and time again, we have seen business owners close shop rather than sell, simply because they did not realize how valuable their business was, or how to start the process of selling it. Some believed finding a buyer would be hopeless or too complicated, and simply walked away from their life’s work… Yet, the sale of a small business is the ultimate reward for years of hard work and sacrifice. It provides the best opportunity to monetize the equity that business owners built over time, and can create wealth for their future – whether that’s a comfortable retirement, or money to invest in different ventures such as real estate.

In the Capital Region, there’s a steady demand for businesses across industries such as white and blue-collar services, manufacturing, technology, healthcare, and education. Owners can expect a good price for their business – albeit a price that aligns with documented, historic performance – and owners can take several steps to create the most value for their business when they exit… This includes cleaning up their books, documenting systems and processes, and shoring up key employees and customers. It also includes engaging with professionals who specialize in the sale process, to ensure they obtain the best outcome possible from business brokers to accountants to, of course, business attorneys.

Buyers and sellers should consult with experienced experts. The pathways to buying and selling businesses are not readily understood by professionals that do not do this type of work. Those that do can provide value and ensure you get a great deal when you close on the purchase or sale of your business.

So, whether you’re unhappy in your current job, wary of starting a new venture, or considering selling your business, the small business market in the Capital Region could be your ticket to wealth-building! The Team at The Wagoner Firm would be happy to answer any questions that you may have about buying or selling a business.

You can call or email us anytime at 518-400-0955 or info@thewagonerfirm.com.

In the meantime, stay tuned for our next article, where we’ll discuss how to evaluate potential business opportunities and prepare your business for sale.

ATTORNEY ADVERTISING. PRIOR RESULTS DO NOT GUARANTEE FUTURE OUTCOME