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The idea of owning your own business is highly appealing to a lot of people. Calling all the shots and being your own boss sounds like a dream come true, right? Well, if that sounds up your street, you’ve come to the right place.
Not everyone has the desire to start their own business, but many have the desire to own one. If you don’t have that burning idea that propels and motivates people into starting their own business from scratch, you may be interested in business ownership as an investment. Buying a business that is already off the ground is different to starting your own. Here are some of the key differences, along with some advice on buying a pre-owned business.
The Risk Factor
Of course, buying a pre-owned business is less risky than starting one from the ground up. A business’ most precarious years are its first three to five years; one this phase is over, if the business is going strong, it is more likely to survive. Coming in as a new owner of an already-established business allows you to continue the legacy that has already been set by the original owners.
However, this is a double edged sword. You are likely to want to change a few things when you finally have the keys to the kingdom; making an old business your own comes with risks of its own.
Creative Control
If the business is well loved by its customers, making changes might decrease its popularity. You must be careful not to alienate the current customer base. If you go in all-guns-blazing and revamp the entire structure of the place, it might seem to the local people that you haven’t got much respect for the business’ legacy. Particularly for businesses where the ‘vibes’ are very important, such as restaurants and cafes, small boutique stores or beauty salons, have caution when assuming new creative control. Buying a funeral home, for example, would be a sensitive topic which should be approached delicately.
The Financial Side
Starting a business might actually have less initial cost than buying one. Because, of course, an existing business has more value than one which is just coming into existence. The buy-out is an initially costly process. However, on the other side of things, running a business that is already successful costs less than financing a startup with no publicity yet. So while the initial cost is a large chunk of money, the ongoing costs are likely to be lower.
Your Industry
Buying a business is one thing; running it is an entirely different ball game. If you buy a business outside of your area of expertise, it is essential that you hire talented managers and strategists who are familiar with the industry. Not all businesses work in the same way, and if you aren’t careful, you can shoot yourself in the foot by investing outside of your field.
Similarly, examine the business you are interested in closely. Ask questions about its age, growth rate and customer base. Gather all the information before you make a decision which will change your life in many ways.