There are many ways to get into the business world. Two options in front of you are either buy a business or set one up. When you buy a business, you are already taking over an operation that has been running successfully, while building a business means that you will face a lot of initial hurdles and possible failures. However when you build up your own business from scratch, you gain a certain pride that the business is your own idea.
Here’s a list of the pros and cons of both options.
Buying a Business
Buying a business requires you to purchase an already existing and successful business. When you take this option, you hit the ground running.
- There is a system, brand, operation and a group of loyal customers already set and ready. Since you are not starting from scratch, you don’t have to waste a lot of time of setting up these things.
- The business would already have broken even, so you don’t have to wait for profits to start pouring in.
- Unlike a start up, buying a business is financially sound, since the business is already reaping profits (or has a plan to do so) and the business model is proven.
- You need a bulk load of money which would cost even higher than starting a business. Buying a business is certainly even more expensive than starting one.
- You may have an issue with how the previous owner ran the business and it may not fit with your usual methods. This means you’ll have to introduce a lot of revamps.
Setting up a Business
Of the two, setting up your own business is more financial risky and has more chances for failing.
- You are the sole owner and you can set up the business according to any vision you have. The design, the brand, the operations, etc. is all up to you.
- Unlike when you buy a business, with this option you are not limited by anyone else’s rules, history or influence on the business.
- Setting up a business is relatively less expensive than buying a business. This is because a start up needs small doses of money to get started.
- Your business is most likely to utilize a blue ocean strategy and access an untapped market.
- There are a lot of reasons your business can become a failure – idea is ahead of its time, market is saturated, poor response.
- It will take time for your business to become profitable.
So which one do you choose? Ask yourself three questions.
– How much experience do you have?
- When you buy your own business, you hit the ground running, so you better have all the knowledge of what goes into a business already. In setting up your own start up, you have the time to slowly learn all the skills.
– What kind of business do you want?
- You probably already have a business idea or business vision in your head. Does the idea or vision already exist? If not, you’ve got to start from scratch and make it happen.
– What kind of finance do you have?
- You need to have a very strong financial backing to buy a business. However for a start up, you can slowly build it up on small dosages of your own finance or a large one in the form of a loan.