Starting verse Buying a Business

Key Points

• Starting a business offers transformative rewards, demanding dedication and perseverance, while aligning with personal interests, skills, and goals.
• Beginning a new business brings complete creative control, growth at your own pace, and flexible hours, but challenges in financing, customer base development, and initial profitability.
• Acquiring an existing business can provide an immediate customer base and revenue, easier financing, and established processes, but demands thorough due diligence and may carry hidden risks.
• The choice between starting or buying a business should be guided by an individual’s unique situation, weighing the potential rewards against the inherent risks and challenges.
• Considering starting or buying a business? Reach out for guidance and support in this crucial decision-making process.

Presented by: Saul Segal

Transcript

Starting a business can be a transformative and rewarding journey that opens up a world of possibilities. While it requires dedication, hard work and perseverance the potential benefits can make it truly worthwhile.

There are several ways to start a business, each with benefits and challenges. There’s no right or wrong answer and the type of business that is best for you will be guided by your interests, passions, skills, financial situation and goals. Whatever path you choose, it will be an exciting adventure.

In this video, we’ll be exploring the advantages and disadvantages of starting your own business verse buying an existing business.

1. Starting your own small business

Starting your own small business is an exciting opportunity, but it is not easy. It requires a big leap of faith as you are usually starting with no customers, no brand recognition and very little cash flow.

Having said that, it is an exhilarating journey that can be incredibly rewarding as you establish a thriving business just on your skills and dedication.

Some advantages of starting your own business are:

• You can enjoy complete control and creative freedom over your business;
• You can grow your business at your own pace; and
• You can set your own hours to work.

Some disadvantages of starting your own business are:

• Obtaining initial financing may prove challenging;
• You don’t have an established customer base or brand recognition and will have to compete with established businesses; and
• It might take a while for the business to be profitable, so, you’ll need to ensure that you have sufficient working capital to cover the initial losses.

2. Buying an existing business

For some people, buying an existing business might be a better option than starting their own. If you’ve done your due diligence well, buying an existing business could eliminate a lot of the risk, time and stress associated with starting your own business.

Some advantages of buying an existing business are:

• You will have an established customer base with the business already generating revenue;
• It may be easier to obtain financing as the business is already generating revenue;
• There may be pre-existing processes, systems and trained staff;
• It may come with the necessary trading stock and plant & equipment to run operations; and
• The prior owner’s financial statements will give you an indication of the business’s profitability in the past.

Some disadvantages of buying an existing business are:

• You need to conduct thorough due diligence as the business may have financial or legal problems;
• The success of the business could be dependent on the experience and expertise of the previous owners or key staff members;
• The decision to sell the business by the previous owner may be due to anticipated difficulties ahead, such as limiting potential growth or expansion opportunities; and
• It can be difficult to accurately value the business’s goodwill.

Before you start or purchase a business, it’s important you seriously consider whether it is a worthwhile venture.

If you aren’t sure where to begin, then give us a call. We’re here to help.