Pressure testing my thesis - be brutally honest w/ me

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by a searcher from Colorado State University
in Minneapolis, MN, USA

3h ago

Pressure testing my thesis - be brutally honest w/ me

Hi everyone, I'm a sales leader with 15+ years in B2B tech, currently exploring acquiring a service-based business (under $500k, professional services or trades) alongside my W2 career. The goal is to acquire a few of these and replace my W2 eventually. My challenge is that I don't want to walk away from W2 income right now. It's working, and de-risking it feels premature. And I don't see how it's possible to buy something that doesn't require me to be in the business day to day. A few questions for those who've been here: Has anyone successfully kept their W2 while owning an acquired business, at least through the first 1-2 years? What made that work (or not)? At what revenue/SDE level does a business realistically start supporting a GM/operator salary on top of debt service and a return to the owner? Is $750k revenue ever realistic for this, or is that a non-starter? For those who started with an absentee/semi-absentee model. What's the blind spot you didn't see coming? Appreciate any insights

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reply by a searcher 2h ago
from Villanova University in York, PA, USA

I know a few who have done this - with different levels of success. One of your jobs performance will decrease due to the having to split time & energy. Would love to hear what other people's experience are.

reply by a lender 24m ago
from Cornell University in Los Angeles, CA, USA

Hi ^redacted‌ - nice to meet you. I'm an SBA broker so I'll come at this from the lending side. On keeping your W2: yes, totally doable. We close these deals all the time. The bank wants to see you actually involved in managing the business. There's no official hour count in the SBA rules, but from the deals we've closed, plan on being at the business roughly two weeks a month, especially in year one. If your W2 is remote that's honestly the ideal setup. A lot of our buyers move to the area, keep the remote job, and run the business around it. Banks are fine with it. On the GM question: ignore revenue, it tells you nothing. The only number that matters is SDE. Take SDE, subtract what you'd pay a GM, subtract the loan payment. Whatever's left is yours. The SBA's published minimum coverage is lower, but in practice most lenders want that cash flow covering the loan payment by at least 1.25x, so that's the number to model against. One thing that works in your favor: because you're keeping your W2 income, we can usually justify paying you a minimal owner salary. That frees up room to pay the GM and still clear the 1.25x. Is $750k revenue realistic? Depends entirely on SDE. $750k revenue with $250k of SDE, sure, that can carry a GM and the debt. $750k revenue with $75k SDE, no chance, there's nothing left to pay anyone. So the real question to ask on every listing is "what's the SDE?" and "what price am I paying for this business" the latter will tell us how much debt to incorporate into our analysis. The blind spot I see constantly: if you're using SBA money, never lead with "semi-absentee" or "absentee." That word kills deals before they start. SBA loans require the owner to be actively involved, so frame it as you actively managing the business with a GM handling day-to-day. Same setup, different framing, and it's the truthful one since you will be involved. Beyond that, look hard at whether the seller IS the business. If customers call them directly and they hold all the relationships, there's no management layer to lean on yet and you'd be buying a job. We have a lot of experience financing various companies via the SBA. If you ever need help reviewing a deal, I am happy to help. We work with all the major SBA lenders. The bank pays us after your loan closes, so this is a 100% free service for you. You can email me directly at redacted or schedule a meeting with me: redacted. Look forward to chatting!