Laid Off or Offered a Buyout? 5 Questions to Answer Before You Buy a Business
A layoff notice or a buyout offer can make business ownership feel urgent, and buying a business after a layoff can seem like the fastest way forward. Severance, a retirement account, and years of experience can look like the ingredients of a business, and plenty of people will be happy to show you an opportunity.
Before you look at any of them, answer these five questions. They will eliminate more bad choices than another list of opportunities.
1. What does the business need to do for you, and by when?
Replace your income? Build equity? Buy back time? Each goal points to different businesses. Be honest about timing, too. How long can you go before the business has to support your household?
2. How much capital can you commit, and how much can you afford to lose?
Those are different numbers. The amount needed to open the doors is not necessarily the amount needed to reach sustainability, and working capital is where many plans fall short. If you are thinking about using retirement funds or borrowing, understand what the financing structure does to your risk. See Business Ownership Financing.
3. What role do you actually want to play?
Owner-operator, manager of managers, salesperson, or builder of a team? Two businesses with similar investment levels can create completely different lives for the owner. Being self-employed is not just doing your old job without a boss.
4. Which ownership path fits: buy, franchise, build, or none?
Buying an existing business brings cash flow and customers along with someone else’s problems. A franchise gives you a system; the question is whether it is the right system for you. An independent business gives you full control and full responsibility. Licensing, distribution, and consulting sit in between. Compare them in Business Ownership Options.
5. What would make you walk away?
Decide in advance. A required personal guarantee? A territory that cannot support the model? Validation calls that do not match the pitch? Walking away from the wrong opportunity is a successful outcome, not a failed one.
Buying a business after a layoff starts with the person, not the product
There is rarely only one path forward. The goal is to make the decision with your eyes open, not on a deadline someone else set. The Business Ownership Assessment and Process lays out how that works, step by step.
The Ownership Profile Questionnaire walks through your goals, capital, preferred role, and timeline before any opportunity enters the conversation (see what the questionnaire covers). Or book a Corporate Refugee conversation. Plan B and C is based on Cape Cod, Massachusetts, and works with Corporate Refugee clients nationally. How Plan B and C may be compensated if a transaction is completed is explained in our Disclosures.