Starting a business can be done in two ways: starting from scratch or buying an existing business. But which one is best? Here are some advantages and disadvantages of starting a business from scratch and buying an existing business so you can weigh up your options.
Starting a Business From Scratch
Starting a business from scratch could be the dream of many, but have you considered the problems you may encounter?
- You can create the business to be exactly what you want.
- You get to build the company from ground up.
- If you have a limited amount of money you can start out small.
- You need to put a huge amount of research into your idea before going ahead, for example: Is there a market there? What are your competitors doing?
- Are you willing to put a huge amount of time into your business?
- It will take longer to see the results of your business.
- There is a risk of failure – according to Forbes 90% of new startups fail.
- You’ll have to get the word out about your business, which can be difficult.
Buying an Existing Business
If starting a business from scratch isn’t for you, consider what goes into buying an existing business. Here are some advantages and disadvantages to buying an existing business:
- The business is already up and running.
- Easier to get finance for an existing business than starting one from scratch.
- There’s already a customer base established.
- Existing employees will have experience in the business.
- You may be able to have the previous owner stay on to train you up.
- There may be contracts already implemented.
- You’ll be able to see results quicker.
- You’ll be able to look into the previous accounts, so you will be able gain an estimate of what figures to expect.
- You more than likely need to invest a large amount of money up front.
- Current employees may not like the thought of a new boss.
- The previous owner many have create a bad reputation for the business.
- You may have to honour any outstanding contracts.