Buy a Business or Start Your Own?

Why Start a Business?

Many people feel more comfortable being part of a large company that provides them with a sense of occupational security. Large companies have structured management and decision making processes that promote a sense of stability to their employees, and for a large percentage of people, not being part of a larger enterprise can take them out of their comfort zone.

On the other hand, there are those individuals who are the exact opposite. They feel a sense of being boxed in when confronted by the structured processes and decision trees necessary to run large companies. As the Business Journals explains in their article, for these individuals, starting a business is a risk worth taking because the reward is the freedom for them to operate in an environment of their making.

Initial Decisions When Considering Starting a Business

The main decisions an entrepreneur must make are deciding on the type of business to start and the best way to get it off the ground. This comes down to a decision of either purchasing an existing business, or starting one on their own. This boils down to three basic questions that must be answered:

• What type of business do they want to open?
• What is their level of experience in that field?
• How much capital are they willing to put on the line to achieve their dream?

The question of which type of business to start is the most subjective of the three and really will decide whether it is better to purchase an existing business or franchise or begin from scratch. The level of experience a person has in this chosen field can influence this decision, but it is not the main element to be considered. While personal experience is a valuable commodity in a business, having a desire and passion about the business model can more than make up for any lack of experience that might otherwise hinder a successful business. People who are passionate about their business concept can easily acquire the skills they need to run it.

Generally, purchasing an existing business is better if your preferences are for networking and growing your business base. Established businesses already have the blocks in place to operate, and if marketing yourself and your product is your forte, then purchasing is better. If you find that your strengths are in building and organizing the foundation of a business, then starting one on your own allows you to form your own structure and policies.

Sole Proprietorship or Partnership?

Your personal experience will come into play to help determine which path seems more logical to your abilities. It is also important to understand the type of business structure that will best suit your business plan. Will you operate as a sole proprietor or is your business philosophy better suited to a partnership?

How Much Do You Plan to Invest?

Another important element to consider before buying a business is the amount and the type of capital you plan on investing into the business. Acquiring an existing business or franchise requires more initial financial capital than starting your own business, but the benefit is that lenders will be more likely to invest in an established business. Buying a business also has the benefit of coming with a pre-established customer base and knowledgeable employees, which reduces the need for costs associated in developing those areas.

If you have more time to invest than money, starting your own business might be more beneficial since start-up costs are much less than acquiring an existing business. The downside is that it will take longer to start reaping the benefits from your business because it must be built up over time. Some people prefer to take on a partner at this stage that has either the skills or the financial backing that they themselves lack, which can significantly expedite the process of starting and running a successful business.

Conclusion

There really is no right or wrong answer when it comes to deciding upon which route is best for an individual to take. The question of timing, experience, and just what types of businesses are available for purchase all go into the decision-making process. If the business model is one that can be started on a small scale and grown into a larger structure over time, then starting a business from scratch will work fine. But if you are expecting to jump right in and have the resources to get started immediately, then finding and acquiring an existing business is the best approach for you.

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