Buying A Business vs starting a business. The decision between the two options has different varying impacts on financial risk, stability, branding & direction.
Risk Of Starting A Business
Starting a business means facing financial risk. Unlike buying an existing business, in which you can identify its current profitability, starting a business means potentially risking losing money, through bad business decisions, and ultimately business failure.
When starting your own business, you face many unknown factors. Questions you should ask yourself could include;
- Will our target customers need us?
- Will the target market like our branding?
- Is the industry saturated?
Buying an existing business means buying the profits, good will, plant and equipment, and in general, the success of that business. Assuming you operate the business in the same general manner as the previous owners, the business could continue its success.
Risk Of Buying A Business
Although when buying a business, you can see the current profits, have plant & equipment set up and ready to go, that doesn’t mean there aren’t any risks.
When buying a business, you are buying its current reputation, among all other things. If the business doesn’t have a good reputation, you can quickly run into problems. You need to ensure you conduct all necessary due diligence in order to identify the business’s reputation.
There Is One Key To Success No Matter What You Choose
You could buy a profitable business, and then run it into the ground, or you could start up your own business and run it into the ground. The same applies with success; you can continue success after you buy a business, or successfully start your own business.
The common theme in whether a business succeeds or fails is 3 main factors;
- Research & Planning
- Understanding the market
- Building strong relationships with customers & other stakeholders
Create a well planned out, comprehensive business & marketing plan. These plans should take quite some time to write up; they should not only articulate what your business does; but also identify trends in your industry, how you will respond to them; as well as setting goals, analysing your competitors and identifying evaluation methods.
So to answer the question: Should I buy business or start my own?
It’s generally slightly safer to buy an existing business, as long as you know full well what your business plan is, and how you will achieve business goals. The same applies for starting your own business. Know exactly what you are doing and ensure there is positioning for your business in the market; go for it.
No matter what you choose, you must have a clear vision and do not have any doubts once your decision has been made.
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