Buying an Existing Business vs. Starting Your Own
Buying an Existing Business vs. Starting Your Own
Diving into the world of business ownership is not a task to be taken lightly. There are plenty of options to weigh before you can even think about opening your doors, but most important of all would be the question of whether you should buy an existing business or start your own. Here, we’ll go over the unique challenges you can expect in each scenario to make your decision a little less stressful.
Buying an Existing Business
There are a lot of pros to buying a business that’s already established: You don’t have to bust your back laying the groundwork to get the business started, but you still get to be your own boss. If you purchase a business that’s already on the up and up, your job is a lot easier—you can step right into a leadership role and continue to keep the trains running. On the flip side, perhaps you’re more interested in purchasing a business whose plan needs a little love. If you think you’d excel at turning a struggling business around, or even expanding a smaller business into something more substantial, you’d do well buying a place that needs your business expertise.
Keep in mind that when you buy an existing business, you assume all of its assets and operations. You’ll get the branding, the clients, the equipment, and the employees (if everyone agrees). And this is where the job interview comes into play: It’ll fall on you to manage this transitional period, and you’ll have to put some leg work into convincing employees, partners, and customers that you can handle running the business. Everyone is looking for a seamless transition. If things get rocky, panic can set in. Remember that you might also need to make personnel changes or let some previous employees go, as personalities can clash when someone new takes over a business. That’s all part of managing a business.
Finally, buying an existing business isn’t cheap—and it isn’t quick, either. Negotiations take time, and you’ll really need to pore over the business’s financial records and tax returns before deciding whether it’s the right place for you. You’ll also need the capital necessary to make the purchase, whether you already have that money saved somewhere or you’re looking into taking out a loan.
Starting Your Own Business
If you’ve never done it before, starting your own business is hard work, and a lot of it. It can be overwhelming, so if you’re not interested in tackling the challenge, buying a franchise or existing business might be your better bet. However, if you’ve got an amazing business idea and are ready to make it a reality, starting your own business can be one of the most rewarding things you’ll ever accomplish. There are obvious pros to entrepreneurship: The freedom to bring your vision to life, with the marketing, design, and plan you put together yourself; you won’t be bound by anyone else’s rules, as you would be if you bought an existing business; and it can be less expensive than buying a well-established business.
There are a certain set of unique challenges to contend with when starting your own business. It’s going to take some time to become profitable, and might be harder to secure financing from lenders due to the high risk startups inherently bring. There’s also the failure rate to think about—you aren’t guaranteed success. According to the Small Business Association, “30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10.”
Bearing all this in mind, it’s important to weigh each option when trying to decide how to proceed with your business plans. Whether you buy an existing business or start your own, you’ll need the cash to cover those expenses. Let the experienced team at ARF Financial lend a helping hand! Fill out a quick quote online; approvals take as little as 24 hours, and we can secure funding within 3-5 days. Now is the perfect time to start pursing your dreams!