The Myth of Absentee Business Ownership: Why 'Hands-Off' Usually Means 'Hands Full'

Many high-net-worth people share a common dream: Buy a thriving business, hire a capable manager, and collect steady profits while maintaining a day job or relaxing retirement. The appeal is obvious—who wouldn't want reliable, passive income without the headaches of a company’s day-to-day operations?

But Judd Goodrich, Head of Capital Markets at Mainshares, has seen this story play out differently countless times. 

"The reality is, even the most 'hands-off' businesses on paper—laundromats, vending machines, storage facilities—actually require far more involvement than people think," Goodrich said. "There's always something: Equipment breaks down, employees don't show up, and customers have complaints that need immediate attention."

The truth is, truly passive business ownership is more myth than reality. For those seeking the benefits of business ownership without the operational burden, there are better options than trying to find that elusive "absentee" opportunity.

Why "passive" businesses aren't really passive

The idea of an absentee-owned business seems simple enough: Find a stable business with predictable cash flow, hire a general manager (GM) to run daily operations, and watch the money roll in. It's why laundromats, vending machines, and car washes often top Google searches for "best absentee-owner businesses."

Reality, however, is messier. Take a roofing company, for instance. 

"Every week you're dealing with new challenges—workers not showing up, project delays, unexpected damage claims," Goodrich said. "I had a friend with a moving company who got a midnight call because his crew accidentally put a hole in someone's wall during a move. The house was going on the market the next day."

Even businesses that seem turnkey on paper require constant diligence. A laundromat needs equipment maintenance, cash flow management, and customer service. Storage facilities face security concerns and payment collection issues. The "simple" vending machine route? Somebody needs to address inventory, repairs, and location relationship management.

Beyond these daily operational hurdles, problems constantly arise. Every week brings new flyers to distribute, project timelines to adjust, and unexpected damages to address. Even with solid infrastructure and standard operating procedures in place, hands-on management remains essential.

"The groups out there claiming you can run these businesses with no work, that it's not that hard—it's just inaccurate," Goodrich said. "If you're buying a legitimate business, even one with good infrastructure and standard operating procedures, there are always edge cases where customers or employees need immediate attention."

Two major risk factors

Beyond running the business every day, would-be absentee owners face two significant hurdles: General manager dynamics and financing risks.

In theory, the GM process goes like this: 

• Hire someone competent 

• Train them well

• Let them run the show 

Without proper incentives or equity stakes, however, many GMs lack the motivation to prioritize long-term business health over short-term metrics. Even worse, turnover can leave owners scrambling.

The operating challenges multiply when dealing with client-facing businesses. In-home services, for example, you're managing everything from worker attendance to project timelines to customer complaints. One missed deadline or poor interaction can spiral into a bigger business problem requiring immediate owner attention—and that's assuming your GM stays put.

"If your GM quits unexpectedly, you need to be ready to parachute in and work full-time hours until you find a replacement," Goodrich said.

The financing piece presents an even thornier challenge. Most small business acquisitions rely on SBA loans, which require personal guarantees from the owner. This personal liability creates a perilous scenario for absentee owners. When things go wrong—and they do—your personal assets are at risk, while your intentionally distant position makes it harder to spot problems and address them quickly.

"You're basically putting all your assets on the line—your house, your 401(k), everything gets used as collateral," Goodrich said. "Now you've got this scenario where you're fully liable but trying to be hands-off. Most SBA lenders aren't even interested in providing debt to someone who isn't going to be involved in the business."

A better path: Minority investment

For those seeking the benefits of owning a business without the operational responsibilities, minority investment offers a better path. Instead of buying a business outright and trying to manage it remotely, investors can back experienced operators who maintain day-to-day control.

"What most people looking for absentee businesses actually want is passive investment exposure to these deals," Goodrich said. "They want the cash flow benefits and potential upside without having to handle midnight emergency calls."

Minority investment in small-and-midsize businesses (SMBs) kills three birds with one stone. Investors avoid personal guarantees, as they're not taking on debt. The incentive structure is naturally aligned as operators maintain significant ownership. And investors can still provide strategic input—some larger investors join the board—without being dragged into daily logistics.

The types of opportunities are diverse, spanning everything from roofing and HVAC companies to behavioral health clinics and rehabilitation facilities. Some investors even back digital marketing agencies.

What unites these opportunities is a strong operator handling day-to-day execution while investors maintain strategic input without operational burden.

"Experience isn't really the main factor—it's risk appetite," Goodrich said. "Investors can cut a check and be as involved or uninvolved as they want from a strategic standpoint. But they're not the ones solely responsible for execution."

Minority investment as the passive income answer

The dream of 100 percent passive business ownership remains just that—a dream. While the internet abounds with promises of turnkey operations and absentee-run enterprises, the reality involves far more risk, complexity, and potential for extra work than most buyers can palate.

For high-net-worth individuals seeking SMB exposure without having to start another full-time job, minority investment in operator-led acquisitions offers a more practical path. They can still provide strategic guidance and enjoy the benefits of business ownership, but without putting their personal assets on the line or facing the constant demands of daily management.

"People come in thinking they want to find this perfect absentee business where they do nothing," Goodrich said. "What they actually want is passive investment exposure to good deals with proven operators. That's a very different thing."

Information posted on this page is not intended to be, and should not be construed as tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction.