For some people, entrepreneurship and working for themselves is the only way to feel truly satisfied with their career. And, while there is a lot of reward for those that take this path, there are also a lot of risks.
Many new businesses fail within their first few years of operation losing money along with this. This can be a daunting fact for entrepreneurs. Sometimes, no matter how good your idea is, there is no way to know if it will work in practice.
Luckily, there are more ways to strike out on your own then starting a business from scratch. Many entrepreneurs choose to buy an already existing business in order to become their own boss.
This gives them the opportunity to study the business records and discover the true viability of the business. The chance that you will succeed is remarkably increased and you’re left with the task of growing and expanding the business.
Of course, this is not the best option for everyone. While the risks may be less, the costs are often more, and it can be difficult to find the right business for you to buy.
When it comes to deciding what will be right for you, you will need to weigh up the pros and cons of each option. Consider your own situation and goals.
Careful research and future planning are the best ways to make sure that you choose the option that is right for you.
Reasons you should buy
Starting a business, unsurprisingly, has a lot of financial risks. There isn’t really a way to know how the business will do in the future. If you find the right business to buy, you will have a track record of the business in the form of the previous year’s records and financials.
Although the capital that will be required to a buy a business will be a much larger amount, banks will be more likely to lend you the money. Obviously, this will be dictated by the specific business that you are looking at buying- the business will have to be perceived by the lender as reliable.
You will also be able to walk straight into an established brand with a client base. This is something that can take years if you are starting a business from scratch.
Buying an already existing business will give you the opportunity to run a venture that already has structures and systems in place. Having minimal experience can make starting a business a difficult path to take as you will need to know what has to be done to put your venture in motion.
You will even be able to negotiate a hand over period where the current owner of the business will stay on to show you the ropes. Your employees should also be trained and ready rather than you having to be in the position of employing and training them yourself.
When you buy an existing business, you could also be acquiring valuable patents and copyrights that come with it. This can be very profitable.
Choose the right business to buy
The important way to make sure that buying a business is a success is to take your time and make sure that you are buying the right one. You will need to conduct a thorough due diligence and make sure you’re not going to be stuck with problematic contracts or outdated stock.
When you are looking for a business to buy, you should be taking into account where your skills lie. Going into a sector that you have some kind of knowledge or familiarity with is a good idea.
You will be with this business day in and day out for a while, so make sure that it is something that you feel is a real match for you. You will also need to think of this in terms of business size. Do you want to buy a small business with only a few employees to manage that you can, possibly grow? Or are you looking to buy a larger business that already has a team working for it and a range of customers?
There are a lot of entrepreneurs that may be wary of buying an existing business because of the perceived lack of creativity required. Starting a business from scratch lets you come up with ideas and, hopefully, watch them come to fruition.
The branding and products of a business will usually already be established when you buy it. Although you will be able to have creative input in time, if you are excited by the branding and innovation of business, you may want to start a venture from the ground up.
When you buy a business, you also take on its reputation. If the business has a bad reputation, you will have a lot of trouble trying to get rid of it despite the new ownership. This can be solved by doing your research and asking questions in order to ensure that this is not the case with the business that you buy.
Of course, the business may be valued cheaply because of this poor reputation. You will need to weigh up if the dent on the price is worth the dent in the reputation, though.
Speak to vendors, suppliers and customers in order to find out more about why the business is for sale. Getting a better idea of why the business is for sale will help you decide whether or not you will be able to make a success of it in the future.
If the business is under-performing, it could take a lot of investment to get it to a performance level that you are satisfied with. Putting the business on a path to success, however, will only really be possible if you know that the business doesn’t rely on the owner to run.
Will you be able to acquire the previous owner’s knowledge and build the same relationships as they’ve had?
All these issues will play into the decision as to whether it will be better for you to start a business or buy one.
Find your perfect fit
No matter what route you decide to take, the most important factor will be finding the option that is right for you. If you buy a business, you will need to choose the right one, which can seem like a daunting task. However, if you are looking to start a business, there are still ample decisions that need to be made.
Both buying and starting a business will take time. The only way to make sure either of these endeavours are successful is to research as thoroughly as possible.
You need to be sure of the market, the sector that you are wanting to enter and your goals for the future.
You should have some idea, already, of what your ideal business would be- a restaurant, manufacturing business, a shop or even a hotel. Most sectors will have a wide range of choices when it comes to selecting an established business to buy.
If you can find the right one, you will be launched into an immediate venture giving yourself time to focus on growth. Your research will also be founded on proven track records rather than solely on future projections.
That is why many entrepreneurs have found themselves opting for the option of buying an already existing business.
If you do what is right for you, though, there is every chance that it will be a success.
By Bruce Hakutizwi, USA and International Accounts Manager for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses. Bruce has over 7 years’ experience working within the business transfer marketplace connecting buyers and sellers. @Be_theBoss