What should I do: set up my own business from scratch, or buy one?
If you have a clear idea of the kind of business you want to open and you’ve already worked out the investment, my advice is to look into buying a business or company that is already up and running. Here’s why:
- If you buy a business, you’ll have immediate cash flow. If you start your business from scratch, you’ll have made an investment without knowing when the money will start coming in. That’s one of the reasons why so many businesses don’t make it to their second year.
- If you buy a business, you’ll have the financial data you need to evaluate the business you’re considering. If you start your own business, you won’t have any figures to go on. (A business might be doing badly in the hands of its current owner, and with your ideas and entrepreneurial mindset it might be possible to make it a success.)
- If the business you buy already has employees, you’ll have people who, in principle, are trained and ready to start. If you build your business from the ground up, not only will you have to do everything yourself at first, but you’ll also have to spend time recruiting staff, time you could be spending on growing your business.
- By buying a business that’s already operating, you start out with existing customers and sales. When you start a new business, those sales and customers may take longer to arrive than you had planned, and that alone is enough for a lack of sales to drive you into bankruptcy before you’ve even got going.
- If you buy a business, you know from day one roughly what your monthly costs and income are. If you start your own business, your income could be lower and arrive later than you expected, and your costs could be higher than you had budgeted for.
This is the business mindset shared by the vast majority of successful entrepreneurs in the US.
Further reading
Featured image: PattayaPatrol, CC BY-SA 4.0, via Wikimedia Commons.
