Buying Existing Business Or Start New
Brokers Law
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Buying Existing Business Or Start New
When making the decision to start a new chapter in your professional life by going into business for yourself, there is an important question that one must ask….whether to buy an existing business in a particular industry or sector, or to start a new business in that same space. There are benefits and drawbacks to each. Ultimately, the decision lies in your hands and what fits best with your particular situation. Here is a checklist of the pros and cons of doing each.
Start A New Business
Pros
You did it your way
Your the boss, no more working for the man
Your passion is becoming a reality, pursue a career in something that is
rewarding to you
More flexible work requirements
Opportunity to make more money as an owner
Cons
Much more difficult to do than buying an existing business
- More effort needed to succeed
Time consuming for the principal
More hours
Difficult on family
Longer startup time
No guidance on proper way to start a new business
Income stream not existent to begin, slow to grow
Lack of experience may hinder ability to succeed
Lack of benefits
Insurance, retirement plans
Start up time is higher
Risk of failing and losing it all
Hire employees
- Purchase or lease space
- Create brand awareness
Buy An Existing Business
Pros
Established customer base
- Existing cash flows from customers
Team set – employees in place, no training required
Turnkey opportunities, no or little startup time requirements
Employees in place
Office space set
Vendor and inventory management set
Customer base exists
Brand is developed already
Not as difficult to acquire working capital if necessary
Lenders have an existing business to review
Cons
Competition in the market segment is on the rise
Organizational changes may be required
Employees may be a problem
- Bad employees
Employees retention with the new owner
Operational changes may be required
- Equipment may be outdated, inefficient
- Building may not be adequate
Inherit previous owner problems
Employees
Reputation
Bad location
High debt levels
Inventory issues – sourcing, rising material costs
Value paid is not the same as the value that was received
Bad due diligence
Debt levels decrease cash flow significantly
Incorrect financial outlook
Customer base not as solid as thought