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Buying Existing Business Or Start New

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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  • Equipment may be outdated, inefficient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