In this beat up old economy some things never change. Main street businesses (i.e retail stores) abound. They still comprise most of American businesses.  There are many many main street businesses for sale and many bought each day. There were times in my life when I wanted to downsize my thinking to acquire these types of smaller businesses because (obviously) they were easy to acquire. They also cost less and the sellers were more realistic.

I have purchased retail businesses on behalf of clients but never for myself.  I always went for businesses a notch larger. The average storefront deal might have $250,000 in sales in the average town. It is a living and might net the owner as much as $75,000 in salary.  But this is a somewhat limited perspective and I could not live with that. I always wanted a bigger company for reasons which I have made clear all throughout this blog.  For one thing I always knew I was buying a lifestyle which meant that the company had to be big enough for me to sidestep the day to day activities.  So at the very minimum it had to be $1.0mm in sales. I never like $500,000 in sales, always $1.0 Million.  Even that is on the low side.

Interestingly enough these retail store dynamics have changed dramatically. Some would say for the worse, some would say for the better. Retail chains can’t even make it. Here are some examples. Try to find a Blockbuster Video Store anymore. CDs/DVDs are on the decline being replaced by streaming media and/or Netflix type business models. Try to find a bookstore. Goodbye Borders and take with it main street bookstores. That business has mostly gone to Amazon.  Many businesses will need to stay on main street such as restaurants, convenience stores, clothing and products which you need to be able to touch and feel.

I was a big audio buff when I was younger and used to wander into stereo stores all the time. The Whiz and Circuit City thrived once but eventually couldn’t handle modern times. Now if you want high end audio equipment you go to a big town like New York City or you go direct to the internet. There is no middle ground. Auto repair shops barely repair anything anymore, a tuneup is obsolete. Hardware stores survive in the face of Walmarts and Home Depots but only because the sheer size of these retail giants makes driving distance a factor.

I once had a boss that had a wife who ran a toy store in a big town just as a second occupation. That happens all the time. A retail operation may not have enough money in it for a family but it will work for half a family.

So what am I driving at? Well this gets to the size of your target company. How involved do you want to be and how much money are you satisfied making? Generally speaking real businesses are sold “turnkey” which means they can operate on their own without any help from you. The smaller the business they less turnkey it is. Meaning that it may need you to run it since the previous owner was chief cook and bottle washer. So if you like the idea of running the company day to day then very small and main street businesses may be your thing. Finally, unless you have a chain of locations, which we have seen doesn’t always help, the retail store simply can’t grow beyond its town. And that to me is a dealbreaker. Stick with commerical, industrial and scalable enterprises.