Emanuel Ruiz bought multiple businesses with mixed results: one turned $190,000 into $2M with monthly profit growing from $6,000 to $60,000, but he lost $150,000 plus $200,000 in inventory on a pillow business and $90,000 on a supplements brand. He warns that most buyers fail and suggests building from scratch might be safer.
Buying a business has been pitched as the safest thing to do, especially if you are a high net worth individual. The problem is that on a fancy spreadsheet, it might sound like the smartest decision you can make, but ultimately leave you bankrupt. And I speak from experience because I have purchased multiple businesses, and I can tell you that my most successful business that I have ever purchased, I purchased her for $190,000, and now it is worth upwards of $2 million. It was making $6,000 per month in profit. Now it is making $60,000 a month in profit. And just based on that example alone, people's ears start ringing. But what people don't tell you is those failures, because I have been in the position of a bunch of failed acquisitions. We're talking about one that I can probably find over here, which is a lumbar support pillow company where not only did I get burned off of $150,000 of acquiring the business, But an additional $200,000 of inventory that I lost. Or I can also go ahead and lead with a supplements brand that I went ahead and purchased that because of seller financing, I only lost $90,000. But the biggest difference between my situation and a lot of people looking at buying a business is that most people only have one at bat. They look at an SBA loan. They see how much they have in their bank and they try and go all in thinking that there is no room for failure. And I always say this, that some people are just too smart for their own good. And that is people that have money because they think buying a business, they're able to fast-track success. Meaning somebody already built out a business that is successful, cash flowing money. Why would I want to start from level One. Well, here's the thing. A good business just doesn't fall out of the sky. We're talking about months of searching up a good business. Another month of going back and forth, interviewing different sellers, going back and forth with SBA lenders. All of this can add up to 1, 2, maybe 2 and a half years of actual work. Where in the meantime, you could have been building something with a 10th of the price it would have took to actually buy a business. And throughout that time, build up your book of business and build up your own experience without having to put down a personal guarantee. Because here's the thing, 9 out of 10 people, and you can probably search this up anywhere on the internet, are going to fail by buying a business. And the issue is that those 9 people that end up failing will never talk about their failures because who loves talking about failing?
