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Should I Buy or Start a Business?

Wednesday, January 3, 2018 · 0 Comments

 

 

As we dust of the party shoes and enter 2018, many people start to plan the year ahead. ‘Is it time I start selling my famous gingerbread cookies at the markets’? ‘Amazon has opened - maybe I should start selling online’? The options are endless…

One of the biggest questions many people are asking themselves, should I start a business from scratch, or should I buy a business? Business for sale websites such as BSALE see a massive growth in traffic every year in January. People have New Years Resolutions and they want to see what is available!

 

4 Reasons; Buy Established vs. Start from Scratch:

1- Established Customers 

One of the biggest challenges every new business faces - obtaining customers and keeping them.

A business that has been established has a client base. It has a reputation – people know where it is and what it does. Hopefully the reputation is a positive one you can build upon it!

 

2 – Market Tested

If a business has been established, it will have a sales history. How did it perform? What products or services were working? what could be improved upon? An established business has a benchmark, and starting point that has some data and history to work with. Starting from scratch, you have very little information. You can do market research and analysis, but an established business has most of it available for you.  

 

3 – Value for Money

Established businesses that are for sale tend to work on an ROI (return on investment). How long will it take to earn the money that was required to pay for the business. If you are purchasing a business with a lot of equipment (e.g restaurant, manufacturing, automotive) it can sometimes be better value for money then starting from scratch. All the equipment would have been purchased and started to depreciate with the business. It is expensive to purchase the equipment new.

 

4 - Its ready to go

The business is operating so you are simply transferring ownership. There is no time spent with shop fit outs, buying equipment and stock, registering ABN, setting up websites etc. An established business is ready to keep operating, and to implement your own changes. There is a lot of time spent in setting up all these elements in a new business.

 

Obviously there are pro’s and con’s to buying or starting a business. It really comes down to what you as the potential owner is looking for. Do you want to take on an already established business and build upon it? or do you have a dream you want to start from the ground up? Doing your research, obtaining professional advice, and assessing the market place is important.

 

Best of luck with your endeavours in 2018, we hope that business is prosperous whether you decide to buy or start!

 

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