Don’t Buy That Business Yet
Thinking of buying a business? That’s big. But here’s the truth: most people get lost because they don’t know what to look for. They’re excited, maybe a bit nervous, but they skip over the essentials that can make or break a deal. So today, I’m going to break it down using my TORSCE™ Rating Scale—think of it like a checklist to save you time, money, and a few headaches.
T is for Time
First things first: every business takes time to run. But how much time? That’s the question. If you’re buying a business that’ll drain you for 60 hours a week, is that worth it? Time is the one thing we never get back, so if the business will eat up all your hours and leave you burned out, it might be time to look at a better option. The goal here? Buy a business that aligns with the life you want, not one that takes it over.
O is for Opportunity Cost
Say “yes” to one thing, and you’re saying “no” to others. This is where opportunity cost comes in. If you jump into a business, you’re committing your time, energy, and maybe money to it. But here’s the catch: is it the best opportunity? Or is there something out there with even better potential? Make sure the business you buy is worth whatever other opportunities you’re leaving behind. Weigh the trade-offs carefully!
R is for Risk
Every business comes with risk—it’s the price of entry. But it’s not about avoiding risk; it’s about managing it. Are you comfortable with the risks involved? Do you know enough about the business, the market, and the financials? If you see red flags but don’t fully understand them, ask questions, get clear, and be ready to walk away if the risk doesn’t feel right. Risk isn’t the enemy here; jumping in blind is.
S is for Skill
Skills matter. Are you walking into a business you know a bit about, or are you flying in completely blind? Think about what you bring to the table—experience, knowledge, maybe a strong network. If there are skill gaps, can you bring in the right people to cover those? If not, you’re setting yourself up for a challenge. Success often comes down to having the right people on the team, so know what you’re missing before you dive in.
C is for Cash Flow
This one’s non-negotiable. Cash flow is king. Even the most promising business idea will struggle if the money’s not coming in consistently. A business with cash flow issues can feel like a black hole, draining your funds while you try to make it work. Look for businesses with steady, predictable cash flow from day one so you’re not left scrambling to pay bills and cover expenses.
E is for Enterprise Value
And finally, enterprise value. Think long-term: will this business build your wealth, or is it just going to pile on more work? Enterprise value is about future growth—are you setting up for an eventual exit? Will this business be worth more down the road? Don’t buy just for today’s gains; buy with the future in mind. You want a business that grows your bottom line and can eventually give you a profitable exit.
Bringing It All Together
Here’s the big takeaway: The TORSCE™ Rating Scale is here to help you see the full picture. Don’t rush into a business because it “sounds” good. Use this checklist to see if it really is good. A business that eats up your time, doesn’t pay enough, or is too risky can end up being a major drain. But when you find one that hits all the marks, you’re looking at an investment that can really pay off.
So, next time you’re looking at a deal, pull out TORSCE™: Time, Opportunity Cost, Risk, Skill, Cash Flow, Enterprise Value. Let this guide you. Buying the right business is about asking the right questions—and now, you know what to ask.
Get the full TORSCE method and learn how I buy and scale 7-8 figures businesses.