Don’t Buy a Job—Buy a Business

When you’re scouring listings for a business to acquire, it’s easy to get drawn in by the headline figures. A £100,000 selling price for a business generating a £50,000-a-year profit (2x multiple) might look like a good opportunity, especially if there’s obvious room for growth.

But here’s the truth: the numbers on paper don’t always accurately reflect how much of that revenue depends on the owner’s day-to-day efforts. Sometimes, a so-called “business” is really just a full-time job in disguise—and I say that from personal experience.

It’s worth noting that, despite the attention-grabbing title of this article, buying a job might not always be a bad thing. You might be looking to make an acquisition as a lifestyle choice—to leave a job you hate, enjoy more flexibility, or simply try something new. The important thing is to be aware of what you’re buying and how much you should pay. You’ll read a lot about the price of a business being determined by a profit multiple, with 2–3x being a good rule of thumb. The crucial detail is that the multiple is applied to profit (the money you’re left with after you’ve paid yourself or someone else to do the work required to run the business). A job is worth much less than a business.

Buying a Job: A Real-Life Example

Let’s say you find a small, one-man gardening business where the owner trims hedges and mows lawns. The listing boasts a £50,000 profit.* It looks great at first. But ask yourself: If someone else had to do the actual gardening, how much would it cost?

Imagine you’d pay an employee £25,000 a year to handle the physical work. Suddenly, your £50,000 profit drops down to £25,000 (it would likely be far less once you’ve paid National Insurance, holiday pay, etc., but we’ll keep things simple for now).

Then you, as the owner, need to spend time finding new customers, doing the books, and making sure your employee is doing their job properly. That could take up a couple of days a week. How much is your time worth? If you’re on a £50k salary, then each working day is roughly worth about £10k, so if you spend two days each week, then you need to subtract another £20k from the original £50, so you’re only left with £5k of true profit at the end of the year. You might be happy doing the work and ending up with £25k, but if you’d paid £100k for the business, you’ve definitely paid too much—you’ve effectively bought a job.

*Note: You might think it’s sneaky for a broker to post an advert for a business like this, but it’s pretty common on many of the business-selling sites. Sometimes, the only way you can validate the numbers is by requesting the information pack and/or business accounts to work out the “real” profit yourself.

The Reality of Running a Business – It Takes More Time Than You Think!

Plenty of owner-run businesses rely on one or two people to handle everything: sales, customer service, bookkeeping, admin – the lot. So when they come to sell the business, it’s easy for them to underestimate how many hours they truly put in.

Being something of an optimist, I tend to think that sellers usually don’t deliberately lie about how much time they spend on the business. It’s just really hard to keep track of that stuff when you’re actually doing the work. I’m sure in some cases, though, a seller might be a little sparse with the truth—they obviously don’t want to scare off potential buyers!

The nature of the work is important too. I learned this the hard way when I bought my business. The owner claimed they spent just a couple of hours a day on customer service, sales, and general admin. In particular, calls might be fairly short, but they pop up randomly throughout the day, making it nearly impossible to tackle bigger tasks. A few minutes here and there might not sound like much, but trust me, it adds up fast—plus context-switching is really painful when I’m trying to do my day job as an SEO consultant.

For my business, a decent chunk of revenue comes from a small number of high-value orders, and those customers really want to speak to a human before they feel comfortable handing over their cash.

How to Avoid Buying a Job

How do you steer clear of this pitfall? The answer is due diligence! When negotiating the purchase of a business, it’s important to maintain a positive relationship—so you can’t be overly cynical. My advice is to trust what the seller tells you but verify everything to ensure it’s correct. If you find they’ve not been completely accurate in how much time they spend on the business, give them the benefit of the doubt—they probably just made a mistake and didn’t realise how much time they really put in. That said, if they’re consistently providing inaccurate information about various aspects of the business, and you really think they’re being dishonest, then walk away.

Tips

1. Do a Time Audit: Ask the seller for a detailed breakdown of their daily, weekly, and monthly tasks. Every tiny thing counts.
2. Shadow the Owner: If possible, spend a couple of days alongside them. If it’s a seasonal business, try to spend time with them at the busiest period, especially if they are hands on with sales or customer service. See first-hand what’s actually involved in the day-to-day running of the business.
3. Factor In Fair Market Value: What would it cost to pay someone else to do what the owner does? Deduct that from the net profit.
4. Explore Automation: Can you automate or delegate parts of the operation? Keep in mind that setting up new systems requires time and money.
5. Match the Business to Your Goals: If you want to go all-in as an owner-operator, that’s great. But if you’re aiming for a semi-passive income stream, be realistic about the labour you’ll need to outsource.

Conclusion

Buying a business is exciting. But if you want a genuinely profitable, sustainable asset, you need to look beyond the surface-level numbers. Check how much of the so-called “profit” is really just paying for the owner’s labour. Proper due diligence is the key to avoiding the trap of buying a job when you thought you were buying a business.

Stay tuned for more insights on spotting pitfalls and seizing opportunities in small-business acquisitions. And as always, I’d love to hear your stories and questions!