Would You Buy a Business or Start and Existing One?
You might have a great business idea and you can actually visualize all that your business will be and more. You have a certain amount already set aside and you are raring to go. You feel it in your bones that you are going to make a success of this endeavour and there is no stopping you. However, you can’t seem to make up your mind whether you have to buy an already existing business or start a completely new one.
The decision is not an easy one because there are advantages and disadvantages for both and some would advocate for one and not the other. Mostly it depends on the person you are. How willing are you take risks for something you strongly believe in? The type of business you have in mind might be better started from scratch than inherited and we might also consider the level of business experience you have. Choosing to start a business with no prior business experience does not seem like a wise idea especially considering the percentages of new businesses which fail, and some of them being run by experienced persons too!
Considering the advantages and disadvantages of one over the other would help those not so sure about what to do to make an informed decision.
Advantages of starting a new business
- Normally when you think of starting a business you have an idea that is development and you want to implement it directly. Starting your own business will give you room to do just that.
- You do not have to worry about the past part of the business as you are starting on a clean slate.
- You will most likely enjoy it if you are the foundation setting type who takes pleasure in seeing an idea getting momentum.
- Though not cheap per se, starting a new business is much cheaper than buying one already in existence.
- It offers you the flexibility to do everything as it appeals to you and as you see fit and not as required by the existing business.
The Disadvantages are
- A new business does not instantly get off the ground so you should be prepared to wait several years before you can enjoy the profits.
- The probability of your business failing to get off the ground or fail within a few years of starting is much higher compared to if you buy.
- There are many unknowns you have to be prepared to face.
- Getting financial assistance for an unproven business is an uphill task.
- You have to do a lot of groundwork, finding customers, employees, suitable premises and everything else.
Advantages of buying an existing business
- The success rate is higher because you will be taking over a business already proven.
- It is easier to get finance loan because banks would consider your business’ track record.
- You will not have to worry about doing a lot of groundwork as you will just take over from whatever was being done before you.
- It is less risky to take over an already operational business than it would be to start one.
- You might get well experienced employees who might even explain to and help you through some things.
- The business might already have a good reputation built, a good customer base and reliable services or products.
- The reward can be instant as you can even give yourself a salary.
- A ready market is likely to be there and you do not have to worry about this.
The disadvantages of buying a business are
- You might inherit existing problems which will be difficult for you to solve.
- You have to stick to the existing rules leaving you little or no room to manoeuvre.
- You will never get the thrill of seeing a business you started becoming a force to reckon with.
- It is much more expensive to buy an existing business than it would be to start a new one.
- You might get bitter employees who had hoped of getting advanced before you came along.
The above points favour buying an existing business because the disadvantages of buying are outweighed by the advantages. This points in favour of buying an existing one if not for anything else but for the ease with which you can cruise into being a successful business person. Not to be forgotten or taken for granted is the fact that you might buy a dying horse. Be vigilant in checking every minute detail to do with the business before you commit.
Everything having been said and done, the ultimate decision should lie with you. All information is made as guides but the person who knows you is you and the person who thought of and came up with the business idea is also you. Put all you have on the table and make the best choice for you and what you hope to achieve. Where there is a will there will always be a way. And as someone I know would say, ‘It takes a little insanity to do great things.’