Episode Details

What Kind of Business Should I Buy?

If you're thinking about buying a business, this is the question that determines everything. Not how to fund it. Not how to structure it. Not even how to find it.

But what kind of business should you buy?

In this week's episode, Jonathan Jay answers the foundational question every serious dealmaker must get right and explains why choosing the wrong business is the fastest way to sabotage your future success .

Start With the End in Mind

Jonathan opens with a principle borrowed from Stephen Covey: Begin with the end in mind.

Before you even look at sectors or valuations, you need clarity on your outcome. Are you:

• Escaping corporate life?
• Growing your existing business?
• Building a group to sell for seven or eight figures?

Each goal demands a completely different acquisition strategy.

If you want to replace your salary, Jonathan challenges you to aim higher than feels comfortable. If you want to scale your current company, acquisition is the fastest way to move the needle. If you want generational wealth, buy-and-build might be your path.

But the type of business you buy must match the outcome you want.

Why Most First-Time Buyers Aim Too Low

One of the most controversial sections of this episode? Size.

Jonathan argues that most first-time buyers go too small — and pay the price. Businesses making under £100,000 net profit often:

• Depend too heavily on the owner
• Lack proper management accounts
• Have fragile teams
• Leave no room for post-acquisition wobble

Instead, he shares what he looks for:

• At least £1m revenue
• At least £200k net profit
• Stable margins (15–25%+)
• Strong management in place
• Recurring or repeat revenue

The effort required to buy a £200k profit business is not ten times harder than buying a £20k one. But the impact on your life absolutely is.

The Three Core Acquisition Paths

Jonathan breaks down three common strategies:

Escape the Day Job: Buy a business that produces serious income — ideally 10x your salary.

Grow an Existing Business: Acquire competitors, suppliers, complementary businesses, or geographic expansions.

Buy-and-Build: Acquire smaller businesses at lower multiples, combine them, and sell the larger group at a higher multiple.

He explains:

• What fragmented markets are
• Why M&A activity above you matters
• How multiple arbitrage works
• Why strong management becomes critical at scale

And importantly — why one deal can change your life.

The Worst Types of Businesses to Buy

Jonathan doesn't hold back here. Avoid:

• Owner-dependent businesses
• Fad businesses
• Highly volatile or "spiky" profit businesses
• Overleveraged acquisitions
• Companies reliant on family members
• Businesses where relationships walk out the door