How To Quit Your Job: The Ultimate Guide To Leaving Your W2 and Buying a Business

When most people think about possible career paths, they usually think of working their way up the corporate ladder or launching their own company. This can take years and no matter how successful you are, you will always be working for someone else. 

However, another viable third option is buying a small business and becoming an Acquisition Entrepreneur. 

This route has the potential to earn much more than working your way up into the C-suite of a large company and is generally less risky than launching a start-up (the vast majority of which will ultimately fail). 

That is not to say that it is without risk, however. 

While a 9-to-5 job provides a steady paycheck and benefits, it also comes with limitations such as capped earning potential, less control over your work environment, and often, limited scope for creativity and innovation.

Buying an existing business means you get an established customer base, immediate cash flow, and operational systems already in place. 

This can significantly reduce the time and stress involved in reaching profitability compared to the startup phase of a new venture.

Let’s look at how to quit your job and buy a small business.

Self-Assessment: Do You Have the Entrepreneurial Spirit?

One of the first questions you need to ask yourself is: are you the type of person who wants to run your own business?

Obviously, having some business experience is helpful, but it is not required. Many successful Acquisition Entrepreneurs have a zeal for learning and are good at delegating tasks to others.

Here are a few questions to ask yourself to see if becoming an Acquisition Entrepreneur is right for you:

1. Have you ever run a business before?
   
2. How much time do you have to commit to learning what you need to learn to become an Acquisition Entrepreneur?
   
3. How comfortable are you with risk?
   
4. How comfortable are you with making big decisions?
   
5. What’s your attitude towards learning new skills and technologies?
   
6. Do you like delegating and managing a team?
   
7. Do you have access to capital? (it may surprise you to know that answering no doesn’t mean you can’t be an Acquisition Entrepreneur. More on that below.)

For more information take our Acquisition Readiness Quiz!

Business Research and Due Diligence

When it comes to acquiring a business, the first step is always research. 

Various platforms and business broker websites list businesses that are up for sale, including BizBuySell.

You can also network with industry insiders, attend trade fairs, or consult specialized marketplaces that connect business sellers with potential buyers. 

As you narrow down your choices, consider factors like location, industry, size, and revenue to find a business that aligns with your expertise and investment capabilities. 

Sign up for alerts on business sale platforms so you’re promptly notified when an opportunity fitting your criteria becomes available.

Due diligence is a crucial phase that comes after identifying a potential business to buy. 

This process is designed to validate all the information you’ve received and identify any hidden pitfalls. 

Start with financial analysis—reviewing income statements, balance sheets, and cash flow statements for the past three to five years can provide a comprehensive picture of the business’s financial health. 

Market research can help you understand the industry landscape, customer behavior, and the business's competitive position. Legal considerations include reviewing contracts, leases, employee agreements, and any pending or historical legal disputes. 

Utilize professional services, like lawyers for contract reviews and accountants for financial audits, to thoroughly examine all aspects. 

Remember, due diligence can make or break your business acquisition, so take your time and be meticulous.

Traditional business brokers can help connect buyers and sellers. However, they may not be the best option for everyone. The seller often pays for them, so they may not always have your best interests at heart. They also might not be experts in the particular industry you’re looking for. 

Financing Options

You might be worried about the financial aspects—particularly how to fund the acquisition. 

But rest assured, aspiring entrepreneurs have multiple avenues to secure funding, so you don’t have to wait until you’ve amassed a small fortune or quit your day job. 

Here are some of the most popular financing options and tips on creating a budget and securing funds.

1. Personal Funds: This is the simplest but riskiest option. Using your savings means you won’t incur debt or dilute ownership, but you’ll also be directly exposed to any financial setbacks the business might experience.
   
2. Small Business Loan (SBA Loan): These loans are guaranteed by the Small Business Administration and are easier to secure than traditional bank loans. They come with lower interest rates and longer repayment terms but require a solid business plan and credit history. You often only need to put 10% down to buy a business with an SBA loan.
   
3. Seller Financing: Some business sellers are willing to finance part of the purchase price themselves, allowing you to repay them over time. This can be beneficial as the seller is vested in the business’s success.
   
4. Bank Loan: Traditional bank loans can be hard to secure, especially for newer businesses without an established financial track record. However, if you meet their criteria, they offer larger amounts and longer repayment terms.
   
5. Search Funds: Search funds are pools of capital from investors that help entrepreneurs find and acquire businesses. Investors get equity in return, so you’ll give up some ownership.
   
6. Crowdfunding & P2P Loans: These are less traditional but increasingly popular methods. Crowdfunding can be equity-based (you offer shares) or reward-based (you offer a product or service in return for funding). P2P loans involve borrowing money from individual investors online.
   
7. Equity Injection: If you’re willing to give up some ownership, you can look for a partner or investor to provide an equity investment in exchange for a share of the business. Acquira’s equity fund, Acquira Capital, was created to help Acquisition Entrepreneurs buy businesses they may otherwise not be able to afford.
   

Regarding budgeting, start by calculating the total acquisition cost, including the purchase price, working capital needs, and any additional funds needed for growth or improvements. 

Make sure to also account for repayment timelines and interest rates. 

Secure multiple financing offers if possible, to compare terms and rates. This will not only give you options but also bargaining power.

Why You Don’t Have to Wait For Capital to Quit Your Job

Don’t let a lack of immediate funds deter you from pursuing business ownership. 

With a well-crafted business plan and a solid understanding of your financing options, you can find a path that makes both financial and entrepreneurial sense for you.

One of the biggest pinch points Acquira sees for would-be Acquisition Entrepreneurs is waiting until you’ve got everything sorted before quitting your job. 

If you’re truly interested in becoming an Acquisition Entrepreneur and have enough to get started now, the best advice is to jump in and start your search. 

There is no perfect time to quit your job. There is no perfect amount of savings or capital to rely on while you search. 

It’s about saying to yourself, “I’m done making money for someone else. I’m ready to take the risk.”

It’s about telling yourself, “I’m done making money for someone else. I’m ready to take the risk.”

Otherwise, you risk waiting in perpetuity until all your ducks are in a row (which might never materialize). 

Deal Negotiation and Acquisition

Navigating the acquisition of a business requires skillful negotiation and meticulous attention to detail. 

Begin by understanding the business’s valuation and how it compares to similar businesses in the market. Acquira’s Accelerator Program includes proprietary valuation calculators to help you determine whether a business is a good potential acquisition.

Use this as a baseline for your initial offer. 

Contracts and legal agreements are crucial at this stage; ensure all terms, conditions, and responsibilities are clearly outlined. 

It’s advisable to hire legal and financial advisors experienced in business acquisition to review all documents. Through the Accelerator, Acquira can connect buyers with our preferred vendors to help speed up this process.

Employment to Entrepreneurship Transition Planning

Transitioning from an employee to a business owner is exhilarating and fraught with challenges. 

If possible, spend some time with the outgoing owner for a smoother handover. 

You should identify key staff you want to keep around to help maintain business continuity. You could make the deal contingent on them staying around(at least in the short term). 

Don’t underestimate the importance of effective communication—ensure you clearly communicate your transition plans to your new employees and customers to help manage expectations and maintain trust.

Owner-Operated to Management Run

The vast majority of companies purchased by Acquisition Entrepreneurs are owner-operated businesses. That means that most responsibilities fall to the owner, and if that person were to walk away from the business, the business would falter and possibly fail.

This makes the business incredibly risky to investors. And if you, as the new owner, take on those same responsibilities, you’re never going to be able to step out of the company's daily operations.

That’s why the first priority of any Acquisition Entrepreneur should be to transition the company to a Management Run operation. That involves installing and empowering a leadership team and downloading the many responsibilities of the individual owner to a team that can share the load. 

Acquira’s ACE Framework was designed to help new business owners manage this transition, decreasing their workload and increasing the company's value in the process.

Business Operational Management

Once a leadership team is installed, the focus shifts to operations. 

Start with inventory management, ensuring you understand what’s on hand, what needs ordering, and how to manage suppliers. 

On the marketing front, identify the effective marketing channels and consider new ones that could help grow the business. 

Read: Common Terms You Need to Know When Marketing For Your Small Business

Customer service is the lifeblood of any successful enterprise; ensure you have a system to manage customer complaints, queries, and feedback. 

Keep an eye out for areas where you can streamline operations and implement cost-saving measures without compromising quality.

Legal and Regulatory Compliance

Running a business involves many legal obligations, including licenses, permits, and tax compliance. 

Failing to meet these can result in fines or, in extreme cases, shutting down your business. 

Hiring a business attorney to guide you through the regulatory landscape is advisable. Acquira’s Transaction Advisory & Support Services can also help with this process.

Whether it’s employment laws, zoning laws, or federal and state tax obligations, a legal advisor will ensure that you’re in full compliance, allowing you to focus on growing your business.

Financial Management

Create a detailed budget outlining projected income, expenses, and profitability. This budget will serve as your financial roadmap, guiding your spending and investment decisions.

Next, it’s crucial to diligently track both income and expenses. 

Utilize accounting software or hire a professional to ensure accurate record-keeping. This not only aids in tax preparation but also provides valuable insights into your business’s financial health, revealing areas for improvement or potential expansion.

Always monitor your business’s profitability. 

Knowing your profit margins helps you set goals, make informed decisions, and provide a clear picture of how well your business is performing. 

You should also set specific and measurable key performance indicators (KPIs) to track for your employees and chat with them regularly about how they’re doing. 

Building A Support Network

Building a strong support network can be a game-changer as you transition from employment to business ownership. 

Mentors, business networks, and industry associations' guidance and advice can provide invaluable insights you might not otherwise gain. 

Don’t underestimate the power of shared experiences and collective wisdom. 

Whether for problem-solving, networking, or simply emotional support during the challenging phases of entrepreneurship, a well-connected support system can be invaluable. 

Acquira has a growing community of Acquisition Entrepreneurs that can provide mentorship to ease the transition from employee to business owner.

When Should You Quit Your Job?

The actual timing of when to quit your job is something that many Acquisition Entrepreneurs worry about. The decision can feel overwhelming, especially with the stakes so high.

Let’s think about two things:

• What if the business deal doesn’t happen? If you quit your job too soon and the deal fails, you’d be out of a job. Not great, right?
  
• What if you’re too busy with your job to focus on buying the business? Things might not go smoothly if you keep working and don’t prepare well for the business. This can be catastrophic for a newly purchased business, setting you back months.

A common rule of thumb is to consider the timing of the Final Investment Decision (FID). While reaching the FID might indicate you’re close, waiting until the purchase agreement is in place might be wiser. Often, this means having a grace period of about two months before you’re the official owner of the business.

It’s a game of risk and reward. On one hand, you have a moderate risk (deal falling apart) with medium consequences (no job). On the other, a high risk (lack of proper preparation) with even higher stakes (botching the acquisition).

If you’re considering buying a business, it’s integral to consider the timing of your exit from your current job. By aligning this decision with the later stages of the acquisition process, you safeguard against potential pitfalls, ensuring a seamless transition into your new role as a business owner.

FAQs

Acquira’s Expertise Can Help You Every Step of the Way and More

If this sounds like something that interests you, consider taking our Accelerator+ Program. This MBA-level program will give you the skills to become the owner of a $1MM/year cash-flowing business in as little as seven months. 

It is designed specifically for any aspiring business owner at every step along their acquisition journey – self-assessment, business research, deal closing, and operating and optimizing the business once acquired. 

It also includes access to Acquira’s team, over 100 hours of recordings with acquisition experts, and a robust community of active fellow Acquisition Entrepreneurs. 

Space in the program is limited, so fill out the form below to see if you’re eligible.

Key Takeaways

• Buying an existing business can provide independence and financial security. 
  
• Existing businesses offer established operations and reduced risk.
  
• Several financing options are available, from SBA loans to Acquira’s equity fund.
  
• Skilled negotiation and legal guidance are critical in deal closure.
  
• A strong support network, like Acquira’s community, can be invaluable.