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.