I did it myself when I was only 32, married and had 3 children. We owned a house and I had only 8000.00 that I had saved to open a hair salon but fate intervened and the day I was to rent a space a real estate agent called me and asked if I would be interested in a building that could be used as a business (she was a friend) This was in 1952 when fifty grand was like a couple of thousand today. I took out a huge loan and used my home as collateral and I knew that I had to make the money to pay for the loan. My husband was my greatest support and did all the upkeep on it. Not only did it succeed ,due to having the greatest staff who became life long friends of mine, but when I sold it five years ago, it gave made me ten times more than I paid. It was a huge undertaking but I loved every second of it. Passion is what makes a person successful, not money. I wish you the best of luck with your business which I'm sure will be highly successful. Taking risks combined with good knowledge usually results in great success.

We started a business on a shoestring. In. Our. Laundry room. Starting a business and buying a business is different because of the initial investment. What kind of business is it?

Yes we have, although the circumstances were a bit different. DH was one of four partners in a business with two locations. When one of the partners retired, the remaining three agreed to divide up the business between two in one location and DH alone in the other. This is when DH asked me to come and run his "new" business for him, as he said he had enough on his mind without worrying about a new manager. So I did-- we did not borrow any money, but funded it ourselves for the first six months. Including the two of us we had nine employees. I was very nervous, DH not at all-- after all, he was just continuing to do what he was used to doing and was good at, while I was in a completely new field. The first year I worked 18 hour days, seven days a week. The police used to come and escort me to my car at 2 in the morning, they had my cell number and would call me as they made their rounds (small town).

In the past three and a half years, the business has been more successful by a factor of 80%.... DH and his partner had been subsidizing the less successful office in the other town. That other office? They were at each others throats because of lack of productivity and therefore money, and had an acrimonious dissolution about 18 months after the split. They owed money, as they had borrowed for even basic expenses.

I don't have advice from the specific aspect of starting a business, but something else in your post struck me Gibby.

It seems this is a--THE--chance for your husband to find his footing again in the professional world. This I do have some insight on. My husband will turn 60 this year, and although his job isn't in immediate jeopardy changes organizationally have left him doing more and more with less and less guidance, in an working environment that is all nerves and rumors of layoffs and downsizing. I watch as he struggles to find meaning and worth in what he is doing, and I listen as he vents about how much he hates going to work in the morning. Luckily he has a hobby he is passionate about and one that might be an earnings opportunity. I am so grateful that if or when the end comes for his job he will have something else that will give him a feeling of worth and a sense of passion. There are thousands, maybe millions, of us boomers out there who are being 'put out to pasture' long before we are ready. It's sad, and it destroys self-esteem in a way that is terribly difficult to repair.

So if you have performed your due diligence and it seems you have, this sounds like a golden moment for your man to reclaim HIS passion. I wish you both luck and hope the business does very well!

Ann

This all sounds very familiar! We bought our first business when DH was 57 years old! We put everything on the line and then some! We had both run businesses before and actually were working in the business we bought, so there were no surprises. We too were appalled at how badly run were so many small businesses. DH has a talent and track record for turning around failing businesses that he immediately applied to our own.

We have never looked back though there have been times of extreme stress and anxiety. Owning a business is very different from being employed, and it's like having a family, you can't leave it behind at 5pm every evening! On balance though it has been great for us, and still is.

It sounds as though you have considered this move very carefully but here are a few of my own thoughts for what they are worth.
I always caution prospective business purchasers to make sure the accountant they use for due diligence is independent in every way from the seller. In your case you and the seller both have a relationship with your accountant. If you have complete trust in him/her then you may not need to get an independent due diligence.
Having the seller hold a note is absolutely the way to go and you should make this note a significant value. Your contract should detail under what circumstances payment of the note could be withheld. Right now it will all seem amicable but things can, and frequently do, change very quickly!
Because of your ages, take great care not to over extend to develop the business. Your DH will reach the stage, sooner or later, when he wants to quit working. If you have over invested in your business it may be difficult to sell. I can't stress enough how important it is to have a clear exit strategy from day one!!

All that said, this is both a scary and exciting time for you. Owning your own business can be fulfilling in ways that employment never can be. It can enrich both your lives. As long as you have always pulled together in difficult times rather than fought, you should be fine. You have to decide what life is about for you, playing it safe but possibly risking DH being frustrated and unfulfilled, or taking the leap with all its attendant upsides and downsides. We took the leap and don't regret it! I wish you both the greatest success.

Been there since 2001.

We now run a small resale shop on Ebay.

The key is to create good strong organization and processes to run the accounting and inventory side of the new business.

Being in business is not for the faint of heart. Sure, the owners are the first to make the profits but we are also the first to take the loss. When the economy tanked in 2909, we made $147. one month. DH was working long hours for nothing!

Luckily we figured out years ago that we need large cash reserves to weather the storms. (There will be storms.)

What kind of business? Service, goods, manufacturing??
Don't forget to put aside money for taxes and social security on a weekly basis. We paid $$$ this year. When you are self employed, you have to meet your own social security so the portion withheld doubles.

Wow - didn't think I'd hear back from so many people. Thank you for sharing your perspective - so helpful!

Runninginplace - you hit the nail on the head. This is exactly how I feel about it. I do think it is THE chance for him and it is a golden moment - I couldn't have said it better. The guy loves to work (even on vacation) and is passionate about work (even when he's been working for some gawd awful people at terribly distressed companies). So to be able to work for himself and own a nice little small business is the dream situation for him. He doesn't mind working all the time and he's taken all kinds of hellish situations in stride in the past. I really think he has the right mindset to own a business.

sis3 - thank-you for the good advice. Though we do trust our accountant we have had outside review by two other CPAs including one who has a lot of M&A experience and another 3rd party. Question for you - under what circumstances would one withhold payment from the previous owner on the note due? My impression is that once she walks away and we own it (this is a stock sale not an asset sale) it's ours and we owe the money. Such a good thought about being able to pull together through thick and thin. We have definitely done that for over thirty years - life threatening illnesses (a few times) and multiple rounds of unemployment to name a couple. And you are so right about the exit strategy - we have already talked about that. Current owner incidentally had no plan until we dropped in out of the blue like a miracle.

golddust, the business designs and manufactures custom product displays - functional product displays, displays for trade shows, etc. At the point he starts getting paid, I don't think will have to deal with taxes as you describe. I believe as an S corp he will be paid through payroll like everyone else. Kind of like me - even though I own shares of my company stock, I get paid like everyone else.

Thank-you, thank-you! If anyone else has words of wisdom or encouragement I'll take it. It is so helpful to hear from others who have owned a business.

Very surprised to see that this will be a stock sale! It is not usual. Are you sure that you want to be on the hook for anything that this seller may have sold in the past? All liability transfers to your DH! If you haven't already done so, I strongly suggest you retain an attorney. You will need one in any case to draw up or amend the contract.

Monies can be retained if it is found (before the note is fully repaid) that there are discrepancies or undisclosed material facts by the seller. Someone I know purchased a store from a seller with whom he had formed a relationship and who he trusted. When he began to run the business he found that much of the stock was empty boxes or was way out of date! The seller had actually taken new items from boxes and replaced them with old or used items. The buyer had no seller's note. Despite fighting this case until his money ran out, he went bankrupt, lost his home and everything else.

Purchasing a business is certainly not for the faint hearted, purchasing the stock adds an extra level of liability.

Thanks for that additional info sis. We do have an attorney and have carefully considered the stock vs asset sale and understand we are assuming liability for past sins. Anything is possible but based on due diligence believe risk is low.

With a stock sale, make sure you've had someone look at it from a risk management and insurance perspective. You want to get a firm grasp on your insurance costs (and anything -- such as injuries from prior acts -- that may either not be covered, or require coverage at a much higher costs) as you crunch the numbers.