Starting up a new business or buying an existing business, which way is right for you?
Deciding on whether to buy an existing business or start a new business from scratch hinges around personal and financial issues, but one thing is certain, an existing business that is already established has already undergone and put procedures in place to survive various challenges when compared to the relatively unknown challenges you will face when starting a new business. Accordingly, buying an existing business is often much more profitable in the long run when compared to starting a new business.
On the other hand, if you do decide to start a new business, a new venture can be pretty exciting, with a lot of great things to look forward to including forging a team, building a relationship with incoming customers, coming up with new ways to promote your products or services, and more. But securing finance for a new start-up business can often be difficult when compared to buying an existing business.
So, which way should you go?
To buy or not to buy?
The truth is that when most people visualise owning a business, they instantly think to start a new business, but starting from the ground-up will mean that you’ll need to build a customer base from scratch, hire staff, market your idea, and more, without any track record to rely on. But if you dread dealing with challenges around starting a new entity, you may be better off buying an existing one.
Acquiring a new business means taking over the operations of a working company – with existing cash flow and profits. With it, you get an existing team that is familiar with the business operations as well as an active customer base. And if you like, you don’t necessarily have to reinvent the wheel including creating company policies and procedures, control systems, and a mission statement since all that already exists.
However, buying a business will also have its fair share of challenges. For instance, it will cost you more to buy an existing entity than to start one. Sellers will factor in things such as revenue potential, existing clients, and business assets into the selling price, raising it higher. On the bright side, you’re likely to get financing for such a purchase as it has a track record for lenders to refer to. Owning an existing business may also grant you certain benefits including copyrights and patents, legal rights, which boost valuation figures and profits.
With a business purchase, you can also never be too sure of what you’ve actually paid for. Of course, an expert broker will help you navigate such pitfalls, otherwise, you could get stuck with outdated systems, uncooperative employees, or obsolete stock.
When purchasing a business, ask the owner some critical questions: Why is the business up for sale? What is the industry outlook like? Can the business secure a large enough market share to thrive? How has the product line evolved over time? These questions will grant you a fair understanding of the past, current, and future prospects of the business.
So, which way for you? Start a new business, or buy an existing business? Honestly, it all depends on your personal financial standing, personal preferences and needs. It will also depends on your finances, passion, and window of opportunity. If you’ve minimal time at hand, you probably want to engage a broker and discuss with them the possibility of buying an existing business. A broker such as ABBA Group boasts a global network of business acquisitions and disposals spanning more than $500 million, backed with a team of highly-experienced experts.
Think you’re ready to talk about your business acquisition needs? Talk to one of our representatives today. ABBA Group has you covered with a team of highly specialised and well-networked business brokers, you’re assured of expert guidance and advice from start to finish. Get in touch with us today.
