A new year is beginning. If owning your own business is one of your goals for this year, then it is important to sit down and weigh your options. About 50% of companies with employees fail before reaching the fifth year. While it's not impossible to start your own business, it's incredibly valuable to understand your options and the associated risks. In this article, we look at the pros and cons of buying an existing business versus starting a business.
What is the best for you? Start a new business or buy an existing one
When you envision a business, you probably envision yourself dreaming of a whole new concept and brand. While it is true that it is possible to build a business from scratch, many aspects work against you with a new start-up. For many, buying an existing business can be just as satisfying, with less risk involved. Make sure you understand the risks and benefits of these different paths.
Start a New Business
Do you want to do something in a way that has never been done before? If you like the idea of building something independently and owning all aspects of your business, then a startup may be the right option for you. This option can sometimes also allow you to keep things on the cheaper side. Opting for a home-based business or scaling slowly can make your startup costs more manageable.
Of course, the downsides of starting your own business are relatively well known. You're building something new, which means you don't have an established customer base or brand recognition. Also, when you need financing options for your new business, it can be more difficult to get approved without a proven track record of success and cash flow. There are numerous potential challenges and problems that can affect a startup.
Buy an Existing Business
If you are eager to take on a leadership role and be your own boss, you may be more prepared to immediately start an existing company. The first step is usually to determine what type of business suits your interests, skills, and lifestyle. Once you have a general idea of what you are looking for, you can start looking for businesses for sale.
Buying an established business requires more capital up front. Still, it's generally a quicker process to success because you can skip part of the learning curve involved in starting a business. Whether you're taking on a successful small business with a proven track record, or you know you have what it takes to turn around a business that has struggled to adapt after the pandemic, there are numerous rewards to buying a going concern. The existing customer base and brand allow you to start from day one.
You'll want to take ownership with a clear picture of your long-term goals and business plan, and still need to be prepared for some roadblocks in the transition period. However, for many business owners, these challenges carry significantly less risk than starting from scratch.
For many, the positives of purchasing an existing business outweigh the negatives.
If you are considering becoming a business owner in 2021, at Sunbelt Central America we can help you find a rewarding opportunity as a new owner. Contact Us.
Source: Sunbelt Business Brokers