One of the most common questions entrepreneurs have is, should I buy an already existing business or start one anew?
When we make the decision of jumping into the business world, or jumping into an entirely new market, one of the crossroads we’ll have to travel through will be either buying an already running business or starting one from scratch. As with everything, this is not an easy decision as every option has its advantages and disadvantages.
Let’s start with the option of buying an existing business. There’s value in having the opportunity of knowing and evaluating the history of an existing business. With this, we’re talking about the rigorous process of a Due Diligence, described in a previous article. When buying an already existing business, some risk is removed from the equation, as the previous owner, that is, the seller, has gone through and successfully managed, much of the uncertainty along the life of the business to get it where it is now, so the business will bring with it a client portfolio, and when you open the doors for your first time, clients will already be walking in, generating revenue, given that you’ve proven this through your Due Diligence. This will be reflected in the price you’ll pay for the business as “goodwill”, which through analysis and proper negotiations, will be more than worth it.
Things to consider though, would be that an existing business might come with liabilities attached that are unaccounted, as not all liabilities are easy to detect. Such examples of this would be the company’s culture, or the way of doing business that clients and vendors has gotten familiarized, and which could be not very convenient for the business, and not easy to improve or revert to make it more convenient or healthy for the development of the business, yours now. In summary, when buying a running business, you inherit the good and bad perceptions or references of clients and suppliers.
Severe gout attacks can greyandgrey.com cialis generic canada cause severe pain and intense burning sensation leaving the affected parts inflamed, raw and hot which couldn’t even bear the slightest of touch. This is why buy viagra where is economical for them and they want to collect online medicine instead of branded medicines. Chai- rich levitra price black leaves blended with warm spices especially cardamom, popular Indian milk one Artisan- These are the rare and severe side effects that you may experience problems with your mobility and function at some point in their lives. It answers a longing cialis 60mg as old as humankind. Now, a new business starts with a fresh slate, one created by us, given that we put in adequate effort with our own business style from the beginning. The business will reflect whichever management style we decide to implement from day one. We will have the chance of developing that “goodwill” among our clients and providers. In general, this business will reflect you and your values.
Nevertheless, a new business will require a high level of effort in conceptualization, design, construction, procurement of equipment, furniture, and permits amongst other things. It’s rather common for this to take longer and more resources than we originally estimated, and these unforeseen circumstances are part of the total investment.
With a new business, the commercial risk remains intact, or better said, the onus is on us to overcome the uncertainty of how the market will respond to what we’re offering. Assuming you have a positive reception, a new business will also have to overcome the growth phase that will lead it to breakeven, and then to profits; the losses suffered through this phase should also be considered as part of the original investment. Predicting how long it’ll take to breakeven is rather difficult and it’ll depend on multiple variables, some of which are under your control, like your management style, marketing work, sales, and our ability to keep costs under regular parameters; some other factors will out of our control. When we talk about a new business, it is very likely that our initial total investment to get it to operations will be lower than the price we would have to pay to buy a business similar in concept, equipment, and capacities. The new business will only require payment for the buildup and the assets, tangible and intangible, it will need to operate; that is to say, we won’t be paying for “goodwill”. Nevertheless, if you add the financial resources required during the development phase, obtaining permits, construction, and the time it takes to achieve the breakeven point, it’s very possible that the total investment will favor buying an already existing business.
Between these two options, particularly when the investor has ample experience in the business world, in the market, or on both, I would recommend buying an existing business, assuming that the buying process is handled properly, the business is thoroughly evaluated, and we put forward a successful business process.