If you’re considering starting a business, you might be trying to decide between starting one from scratch or buying an existing business. Each has its own benefits and drawbacks, so let’s take a closer look.
Starting from Scratch: More Work and More Control
If the idea of starting your business with a blank canvas appeals to you, as well as the vast amount of work that’s required to establish and grow a new business, starting from scratch might be right for you. As the owner of a newbie business, you’ll have ultimate control over the direction you take your company. And while having a large marketing and operations budget would be nice, you can get along on a shoestring budget, since you’re the one setting the rules.
Want to work from home? Or Iceland? It’s your call. You can start or move your new business anywhere in the world you want, as you don’t yet have established employees in a specific location to worry about.
On the flip side, a lot more work goes into starting a business from scratch. You’ll have to do plenty of R&D if you’re going to sell products, and until you have the capital, you’ll be taking on a lot more than just the role of CEO. Speaking of money: if you don’t already have plenty of it, it may be hard to take out a loan for an unproven business.
Buying into a Business
Your other option is to buy an existing business. This could come in many scenarios:
- You buy a fully-operational business (perhaps current owner is retiring or moving)
- You buy a franchise
In both situations, you have an out-of-the-box business that already has rules, employees and sales in place. All you do is let the business continue to run successfully, or make a few tweaks to help that happen. One benefit in buying a business is that you’re buying an established brand (especially with franchises), and don’t have to spend time building it yourself. You’ve got existing client relationships in place, therefore, guaranteed sales.
Most of the risk in buying a business comes from lack of research. Always question why the owner would sell a perfectly good business; perhaps there are financial problems that are lurking below the surface? Lawsuits that you’ll inherit?
If you’re not a rule follower, franchises might not be for you, since they have a specific set of policies and procedures you must follow to ensure consistency among all franchisees. And don’t forget that you have to pay royalties for your franchise license!
Whichever route you go, spend time diligently researching the type of business you want to start or buy. Choose the one that suits your type of management and business ownership goals.
Photo credit: k_vohsen