Should you buy a business or start from scratch?
Is starting a business or buying one for sale the best option for you?
There are several routes to becoming your own boss. You can buy an existing business for sale, you could start one from scratch or, in sticking to the middle ground, you could always buy a franchise. There are pros and cons to each option, and what is right for you won’t be the perfect solution for somebody else. So, before you do anything else, you need to ask yourself what exactly is it that you want?
Do you crave total independence and creativity, and want to build something that is your and yours alone? If so, you’d be best starting a business from scratch. If you’re more interested in a fast return on investment, though, then buying a business that’s already trading is right for you. And if you’d struggle working alone and need the support of a team around you, then focus on starting a franchise or investing in a franchise resale.
Buying an existing business gets you an immediate income. Or it should if the business has been run properly. You tap into existing customers, have supply chains in place and if the handover is managed properly, you take over a ‘turnkey’ operation. This is entrepreneurship through acquisition, and give you more certainty than going it alone.
Buy an existing business and you know where you are from day one. It takes a lot of the stress and pain out of starting a business. Of course, you’ll have to pay for it financially at the outset, as successful businesses for sale command a premium. But that outlay is typically offset by faster returns on your investment. And, while, starting a business from scratch might not cost as much as buying an existing business, you will end up paying for your own research and development. Mistakes, as you’ll know, cost money.
And that’s the downside of starting a business from scratch – it poses more risk. You might have the best idea in the world or feel that you can do better than the competition, but you won’t know for sure until you try. Starting a business is arguably the most entrepreneurial option, though, in the truest sense of the word. It might pose the most risk, but allows for freedom and creativity. Whereas, if you buy a small business that’s already trading, unless it has a poor record, you’d be foolish to make too many changes to a proven formula.
There is an alternative, of course. A happy medium where you get to start your own business from scratch but get all the benefits that you would get buying an existing business. And that alternative option is to buy a franchise. With a franchise you buy into a proven business model with marketing, pricing, branding and routes to market that have already been established – just like buying an existing small business. But you also get the benefits of building that business up from scratch in your own area, making your mark on it and having the sense of accomplishment from establishing something of your own.
Should you buy a business or start one from scratch, then? Whatever route you choose, you can tap into your entrepreneurial spirit. But that spirit is best dampened a little if you need to follow a proven model. Buying an existing business or starting a franchise is probably your safer option. And the familiar phrase ‘if it ain’t broke don’t fix it’ is worth remembering here, especially if you’re buying a business that has been successful for some time. That’s what you’re buying into. Don’t risk your investment by making wholesale changes.