Quick business tip – To buy or to start a business? That is the question!
Which is better? Buying a business or starting one from scratch. Here are some pros and cons of each and see which one resonates best with you?
Instant cashflow, history of results, proven location and market size, known investment cost, some systems in place, team already setup, first 2 years of hard yards already done, others having knowledge in that business who work there, buy what you see and like, negotiate a fair price.
Maybe the industry has had its run, may need further re-investment on capital assets, figures may be rubbery, people may leave after you buy it, lease term may be close to the end, business is too tied to the personality of the previous owners, previous owners cunningly targets your clients in due course, you suck at running it, you overpaid for it, demand shifts away from your product or service and you are carrying the debt of it.
Starting a new business-
Exciting new venture, you love the drama, you like creating, you’re a risk taker and happy with the consequences, you can mould what the business will look like, you can say this is your creation.
Be prepared not to replace your daytime job salary for at least 2 years, run the risk of it not working out anyway, not budgeting the consequences of under-performing, not analysing the break costs if you need to stop abrubtly, not being accountable to anyone early on such as your employees for whom you need to pay the wages to help you grow the business, be prepared to keep going when you get hiccups, working long hours because you can’t afford to pay somebody else.
Well, if any of the above makes you excited or anxiuos, then, you may be closer to the answer for you. Yes, YOU. It’s a personal thing and for all the businesses out there, they’re all made up of existing ones, start ups and the ones on their way out.
If you need any guidance on how to run a successful existing business or find one that will suit your skills and strengths, please give me a call.