Small Business: Buy or Start from Scratch?
A Home Business Article Contributed by Philippe Nicolitch
If You Want to own Your Small Business, Weigh the Pro's and Con's of Buying Versus Starting a Small Business from Scratch.
If you are about to become self-employed and want to start a small business, you are probably considering the advantages and disadvantages of starting your own business versus buying an established company.
Advantages of Starting Your own Small Business
Making the decision to start your own small business can be an exciting one. If you are looking for a role were you can make your own decisions this may be the right opportunity for you. As a creative individual who does not lack the view of a big picture and have a vision and creativity, your adventure as a small business entrepreneur will be extremely fulfilling.
Disadvantages of Starting Your own Small Business
On the flip side of the coin, there is a large amount of risks involved in starting a new small business. You probably noticed that many shops open and close a few months later. It is sometimes hard to figure out why, sometimes it is very obvious! In other words many entrepreneurs do not succeed in starting a small business from scratch. It may be due to the fact that all the responsibility is yours, and it is a lot to deal with in addition to taking care of your customers. In summary, if you don't do the job, no-one will do it for you.
Advantages of Buying an Existing Small Business
If you consider buying an existing small business, you may save yourself a lot of work, especially in terms of building your customer base. As long as you keep providing a similar service, and that the previous owners are not taking their client with them, it is very likely that the customers will remain faithful to the services you offer despite the change of ownership.
A good review of the accounting records will be able to demonstrate how the business is doing. This may sound less adventurous than starting your own, but you loose on the freedom to give the business immediately your own 'touch and feel'. You will probably be able to bring some changes, but this may take a few months or years so you don't upset the existing customer base.
Additionally, it may be easier for you to obtain financing for an existing small business with good bookkeeping records.
Disadvantages of Buying an Existing Small Business
You will need to do some serious home work if you are interested in buying an existing small business. It may be interesting to survey the customers and the neighborhood to get an idea of the status of the current business and how they are currently doing. Hidden issues make come up once the sale is closed and you may inherit problems such as dissatisfied customers or financial troubles. It may be difficult for you to change the image of the existing business and give it your own 'touch'.
Finally, make sure you have an agreement with the previous owners that they are not going to open a competitive business in the neighborhood, thus taking all their customers with them.
