PBB Blog

Start-Up vs. Existing Business
Bill Biermann

You’ve made the decision. You will be running your own business in the future! As you explore the initial startup steps necessary to build your business, you realize the long road ahead. Still, you are determined to take the plunge.

After taking a deep breath, you also realize the initial decision can either propel you into immediate operations or result in a startup period which entails a longer runway to profitability. You can build your business from “green street” as a startup, or you can buy an existing business. So, you break out your scale, and decide to weight the plus and minus of each approach. You discover the following considerations to evaluate.

Consideration Buy a Business Start Up a Business
1. Sales Immediate Sales Build Sales
2. Income Possible Profits Day One Ramp Up Period
3. Products / Brand Immediate Branding Ramp Up Period
4. New Market Niches Easier to Enter Time Lag Before Entry
5. Network of Contacts Established Must Build
6. Grow the Business Focus on Business Paperwork Focus
7. Reinvest Earnings Possible Not Possible Yet
8. Employees Trained and In Place Must Train and Find
9. Risk Track Record = Lower Risk No Record = Higher Risk
10. Raising Capital Easier – Established More Difficult
11. Cost Initial Cost Higher Can Operate Cheaper

Your job is to determine the optimal use of your time, and clearly understand the constraints that a start up may impose. Do you have all of the talents needed to grow the business? Do you have the operating capital necessary after the initial purchase? Carefully evaluating the considerations above will usually result in a path that is clear for your particular scenario.

Contact us if you are ready to further discuss purchasing an existing business.