Is buying a business simply buying a job?

[Clinton]

Hey Richard, old friend, great to see you here. What a coincidence! I was meeting with a couple of chaps earlier this afternoon - who go by the names meathead1234 and bryanon on these forums - to discuss an idea of theirs and I suggested they contact you about it as your interests are a good fit!

I accept your point. My view is perhaps clouded by the activity we see a lot of in website buying and selling where there is only an "illusion" of an opportunity to develop the concept to the point where it pays more than basic compensation.

I hear your argument about the current state of the employment market acting as validation for "buying" yourself a job. In India, when I was there, it used to be quite common in government offices for new employees to buy their positions with a bribe equivalent to five years' salary. It made sense for them as it was a job for life and paid a good pension on retirement.

What I'd be interested in hearing are your views on business valuations in cases where initial compensation does not cover the cost of capital far less generate a profit. How would you recommend prospective buyers decide fair value?

[[Note: For those who don't know Richard, he's the author of top notch books on buying businesses, the owner of Diomo Internet, the blogger at the Bizquest blog and is a general all-round nice guy! You can't talk for long about buying businesses without Richard's name popping up as it has in several threads here. Example]]

[mommarina]

My first thought was: 50/50. These days, being an employee in the private sector is almost as risky as owning a business. As an employee, you constantly run the risk of being downsized, outsourced, or canned with no notice and no severance pay. (Public sector - not nearly as risky.) On the negative side of buying the blog, you run the risk of being the victim of a Google algorithm change or any of a myriad of factors outside your control.

As a blog owner, you are learning every day, because you're forced to, how to operate an Internet based business. This is a giant plus, because even if your blog revenue suffers a dip, you will have accumulated enough knowledge to run another web-based business and start something else on your own, or get a job working for an employer, which will pay you much more than a secretary makes.

It's always an advantage to be one of the 1% of the population who can run an Internet-based business (we think it's easy, but the average person can't figure this stuff out) rather than the 25% of the population who can be a good secretary.

So in effect, by buying a blog, you are paying for an real-world education in Internet business.