Real Estate and Your Small Business

 Many years ago when I was a young man, I met a man named Johnny Q, this man owned a small barbecue restaurant business. He was retiring and I was assisting the buyer of the restaurant with the business set up.

As in most small businesses the value was in the owner rather then in the business it's self. As a small restaurant the value was maybe $60,000 plus equipment. The real value was in the building and real estate. The business was sold for $20,000 for the equipment and a lease at $1,200.00 per month.

Johnny Q had over the years paid for his restaurant property while running a business he enjoyed. At retirement he had his wife's pension, his social security and the rent from the real estate.

What I learned from this transaction was that a small business should by the real estate rather then rent. Some 75% of small businesses find that their most valued asset at time of sale is the dirt. If you run a small business buy the real estate you operate out of as soon as you can.

I had a portable building retail sales yard in the 1980'S, I liked the business location but could not buy that property as the price was to high. The solution to this problem was to purchase another location for future expansion so that some of my current profits where being invested in something with staying power.
Three years later when I had to move I had a place to move to. When I sold that business in the 1990's I got less then equipment value. The real estate paid me $2,900 a month for many years until I sold the dirt at a nice profit.