To buy or not to buy, which is the better decision?
Starting your own business is often a dream for many entrepreneurs, but this dream can be very expensive and overwhelming. If you have a great business idea, and are ready to devote a lot of time and effort into building it from the ground up, then go for it. However if you wish to hit the ground running, and hopefully avoid any mistakes and/or common start-up pitfalls, then buying an existing business may be the better option for you.
The benefits of starting your own business are great. You will have the complete freedom and control over pretty much everything from the design, to managing your business and running it according to your vision. As a start-up business owner you will also not be bound by anybody else’s rules, history or asset. Though this you will have an opportunity to create a position and niche in your market.
The challenges of starting your own business vs buying an existing business may be that it can take much more time to become profitable, as you are doing things from scratch, running into problems, fixing your own mistakes and learning from them. Also there are no guarantees that the business will succeed, especially with a high failure rate for new businesses these days. That isn’t to say that there is no risk when you’re buying an existing business, but the chances of failure are lower. The failure of businesses these days results in the next challenge as well, where banks, investors or lenders don’t want to lend you money for your venture as you are a new business, and have yet to prove yourself in the market.
The benefits of buying an existing business or franchise are much different then starting your own business. The main reason why entrepreneurs opt to buy an existing business, or franchise is due to the fact that the work has already been done on building the brand, developing customer relationships and developing the process of the business. More often than not, if a business is a success before the acquisition of the business, you end up near instantly making money, and it is much easier to obtain financing and funding due to the proven model.
The challenges of buying an existing business or franchise are within the investment. The investment is usually an upfront fee, a lot higher than if you were to start-up your own business. If the business, or franchise is very expansive, you end up having to run/operate for multiple years before profit is seen. Another challenge is that when two entrepreneurs change hands (sell and buy a business), there is always a chance that the buyer doesn’t fully understand the business model, doesn’t agree with the vision of the original business owner and wishes to make changes – this can often result in failure.
I believe that if you each business model, whether you are starting a new business or buying an existing business – they both have their own unique benefits. If you are a visionary and wish to see something come from nothing, start your own. If you are an entrepreneur with a goal of income, success and guaranteed success – buy a business or a franchise. Whichever you are to select, a lot of time, effort and money is required.