Mohsin, purchased a small business for £30,000 for his wife as an alternative to providing a monthly allowance. Drawing on his background as a former corporate lawyer, he outlines the strategic process of acquiring a profitable small business, managing due diligence, and ensuring long term sustainability.

Mohsin suggests using online platforms to browse small businesses for sale. Key criteria included assessing actual profit margins, the multiple paid for those profits, the owner’s dependency, and the operational effort required.

Crucial steps involve verifying financials (bank statements, sales data, platform data) and confirming that the business is not overly dependent on the previous owner’s personal connections.

Acquisitions can be structured using cash, credit, or, ideally, by leveraging the business’s own cash flow through seller financing.

Aim to spend roughly 5% to 10% of the purchase price on legal fees to ensure a robust agreement. Always rely on written contracts rather than verbal agreements.

This business model allowed Mohsins wife to operate it flexibly, even while moving abroad, with her mother assisting in operations.

A major distinction between running a business for steady income and actively scaling it. He emphasizes that even a “passive” business requires regular attention to avoid decline.

He also advises against immediate radical changes upon acquisition, suggesting that new owners should first learn from the existing systems and supplier relationships.