If you’ve been thinking about buying a business or starting from scratch, it’s best to start thinking about why you want to do so. There are some benefits to buying a business or to starting from scratch, so it’s best to consider all of them when deciding which you are going to do.
However, I’m confident that after thinking about why you want to be in business, you will decide to buy a business rather than start from scratch. If you haven’t reviewed our extensive guide about buying a business, you may wish to do that first here.
Why buy a business? It’s already established
One of the greatest reasons why you might want to buy a business instead of starting from scratch is the fact that it’s an already established name or brand. You don’t have to focus on building something up because it has already been built. You merely have to pick up where someone else left off.
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On the other hand, you might want to start from scratch because it will be more expensive to buy an established business. However, as with most things in life, you get what you pay for, so you may find it to be worth your while to buy a business that already has customers.
Because the business already has customers, it means you will already have cash flow when you get started instead of having to start from zero. For this reason, it’s also much easier to secure financing for an established business than it is to get funding for an unproven startup.
Why buy a business? For more clarity on costs
Additionally, the costs of entering the business may clearer when you are buying instead of starting a business. You will see the purchase price of the business and should already know whether it has equipment that needs to be replaced.
The price of any equipment that must be replaced should be subtracted from the purchase price of the business. However, since you will already know how everything stands, you don’t have to worry about having a lot of extra cash on hand for unexpected expenses.
Starting a business from scratch will often come with costs that aren’t made apparent right from the beginning. Every business owner has more to learn after they buy a business or start one from scratch, and often these lessons come with a price tag.
Start with employees who are already trained
Another benefit of buying a business instead of starting from scratch is the fact that it will already have employees who are trained. In fact, one of the greatest assets of a business that’s being bought or sold is the employees.
When you’re starting a new business, there are many responsibilities that must be taken care of, so not having to hire and train employees will save a lot of time. Additionally, having trained employees will provide continuity at the business, and they may even be able to teach you a few things.
Further, longtime customers are probably already used to dealing with certain people at the business, so seeing the same faces after a change in ownership may be a factor in getting them to continue to buy from the company. Employees already know what customers want or need, so they are better equipped to keep providing the products or services they know are already in demand.
Why buy a business? Continuity
In addition to employees providing continuity, sellers can also help those who are buying their business make a smooth transition. If you’re thinking about buying a business, you should consider asking the seller to provide you training and other guidance.
You might also want to ask them to introduce you to key suppliers and customers. They may want to increase the purchase price to account for their time, but taking these steps can make the transition go smoothly and increase your likelihood of continued success with the business.
Having an official introduction from the seller will make customers feel more relaxed about the transition and enable you to keep things from falling through the cracks. They will feel like they know what’s going on with the business and may be less likely to shop around at competitors.
Why buy a business? To have processes and infrastructure in place
One other reason why to buy a business instead of start one from scratch has to do with infrastructure. When you buy from someone, you’re buying a complete business that already has processes and infrastructure in place.
When you’re thinking about starting a business, you might not even be aware of what all will be needed to operate that business, so having everything in place when you buy a business can be invaluable and save you a lot of time. Some examples of infrastructure include everything from policies and procedures manuals to equipment and machinery to IT platforms.
In some cases, you may find inefficiencies with the way the business does things, and you can take those opportunities to change things. However, you will at least have a starting point because everything will already be up and running when you take over.
Starting a business could be cheaper than buying
Now that you understand all the benefits and reasons why you might want to buy a business instead of start one from scratch, let’s talk about the benefits of starting from scratch instead. There aren’t as many benefits as there are to buying a business, but some people may still find that the right path for them is to start from scratch.
Perhaps the biggest benefit to starting from scratch instead of buying an established business is the fact that it may end up being cheaper to start from scratch. However, you should be aware that this isn’t always the case. It depends on what type of business it is and what major assets are involved.
When thinking about why to buy a business or start a business, you should analyze the costs of each and keep in mind the fact that there may be things you just aren’t factoring into the cost of starting a business from scratch.
You get to establish your own processes
Another reason to think about starting from scratch is the fact that you get to design every process and procedure yourself. This can be a daunting task for many people, but others may wish to have complete control over every detail from the very beginning.
Of course, it’s important to realize that if you’re starting from scratch, it will usually take longer to get started because you don’t have anything in place. It will also take longer to ramp up the business because it won’t have any customers at the beginning. As a result, you will have to spend more time and money on customer acquisition than you would if you were buying an established business.
Why buy a business?
As you can see, the list of benefits of starting from scratch is much shorter than the reasons why you might want to buy a business instead. One final problem you might find with buying a business is that it can be difficult to find a good business for sale.
However, if you take the time to do your homework and research businesses for sale, you will probably find the right one for you. It all depends on the shape the business is in and whether you feel you can make something more of it after the transaction.
Buying a business is an exciting endeavor, and many people find owning a business to be more satisfying than working for someone else. Before you enter into any transaction, you should make sure that you are ready to make the dive and take on the responsibilities of owning a business.