Should You Buy an Existing Business or Start Your Own?
You’ve always wanted to own a business and go down the path of entrepreneurship. But you know starting a business such as an LLC from scratch can be time-consuming and financially draining. Maybe you should just buy an existing business instead?
If you’re looking to buy an existing business, it’s not as simple as making the purchase and then sitting back and collecting revenue — if only it were that easy! This article will help you understand a bit more about what to expect when you buy a business, as well as look at the other side of the spectrum: maybe you’re better off starting your own.
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Should You Buy an Existing Business?
The simple answer should be one that you are passionate about and have the skillset to control and grow. If your background is in apparel, then it wouldn’t be wise to buy an existing business that deals with car audio installation. Makes sense, right?
Even if you find a business you’re passionate about, you need to consider many factors before deciding to part with your money. Where is the business located? Is it in a high-density part of town, or an area that doesn’t get much traffic? If you’re considering an online business, what do its visitor numbers look like? Are you able to take this business to the next level with your own abilities?
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Think about the financial aspects as well. Is this purchase a good deal? Is the company worth way more than what they are asking, or are you overpaying? Is this business something you plan on tackling full time, or will it be a “side business?” This can help you determine your commitment level: how much time and money are you willing to invest in order to help it grow? How much revenue must you bring in to pay the expenses and still profit at the end of each month? These are all things you should be thinking about when looking to buy an existing business.
Something else you should be familiar with is the competition and landscape of your market. Is the market as a whole showing growth, or is it slowly dying? If it looks like this market is in a downward spiral, do you think it’s a good idea to buy a potentially sinking ship? If the market is booming and the business is doing well, what is its growth potential?
Wins and Losses Are on the End of Your Bat When You Buy an Existing Business
In baseball, you can swing the bat and score the winning run, or you can strike out and lose the game. Ultimately, business is the same way. You will have success, just like you will have failure. Regardless, you need to be willing to stand in the batter’s box and take a swing every day of the week, not just the days you want to. You need to be prepared to add value when looking to buy an existing business—even if the business is already doing well. Now is not the time to get complacent and let your foot off the gas pedal and allow your competitors to sneak in.
Are there new markets you could gain entry into? Brainstorm ideas and write down the necessary steps you plan on implementing to further the business’ growth. Create a timeline of when you want things completed and how you plan on capitalizing on these changes. What will your marketing strategies be? Are you improving upon an existing service and want the public and existing customers to see and understand the changes and improvements made? How will you spread the message? Social media? Be prepared to add value to the customer experience.
When you buy an existing business, there may be employees that come along with it. How are the employees? Are they hardworking? Or are they lazy? Remember, when you buy an existing business, you also inherit the employees—good, bad, and ugly. Sure, you could get rid of the cancers among the group, but at the same time, you start to create an environment where your employees are wondering if they are next to go. You need to quickly figure out who are your leaders and who are keeping the business from moving forward.
Come Out of the Gate Running
The last thing you want to do when you buy an existing business is stroll through the process. You want to not only show your customers, but also your competitors that you mean business. Execution of ideas and strategies will make or break your business. The transition from previous owner to you needs to be as seamless as possible. I’ve seen successful businesses completely fail after new ownership comes in because the new owners decided to sit back and take things slow versus going out and executing immediately.
Keep an eye on your competitors as well. Don’t lose sight of what they are doing and how it will affect your business. Be proactive versus reactive when it comes to your business. Make the necessary changes early on in regards to how your competitors could swoop in and steal your share of the market. The industry is always changing and evolving as well, you need to have your finger on the pulse so you aren’t left behind.
Managing your business and staying on top of everything can be time consuming and not time well spent on trying to grow sales.
Putting Yourself in Position to Win the Race
Business is not a sprint, it’s a marathon. Those who sprint lose momentum and eventually fall behind. You need to put yourself in a position where you’re in it for the long haul. Don’t try to skip steps or rush things. Be methodical in your actions in order to see the growth you desire.
There are two things you should absolutely do the minute you buy an existing business:
1. Use social media to the fullest when you buy an existing business
Right now, you have a free marketing tool and it’s called social media. No other place can you push your brand for free and get out in front of thousands if not millions of potential customers. Create business pages on the social platforms your audience is on and engage, engage, engage. If the page is already existing from the previous owners, look at what they implanted as a strategy and make the appropriate changes.
2. Exceed in value when you buy an existing business
Exceed in value. This is huge. Never over-promise and under-deliver—this is a sure way to lose business. Provide so much value for your customers that they never want to ever consider not doing business with you. Figure out what your customer’s needs and wants are, and deliver. Going the extra mile and showing you care about your customers will help build strong brand loyalty.
Maybe You Should Just Start Your Own Business?
If reading the above you weren’t too keen on potentially taking over a money pit or fixing potential problems of the business, maybe it’s time for you to consider starting your own business rather than looking to buy a business?
Taking over something that someone else built isn’t for everyone. Many find out the hard way that when you guy an existing business, you buy all the things that aren’t so great about the business too.
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Personally, that wasn’t the direction I wanted to go with Weik Fitness. For me, I love the process of building something from the ground up and getting my hands dirty making something successful. While I appreciate those who buy an existing business and continue to build upon the foundation someone else created, it’s not something that excites me, personally. I love the satisfaction of seeing strategies implemented and helping grow the business. I also enjoy the failures and hiccups that come along with starting your own business—it forces me to stay sharp and willing to change plans when things don’t work out.
When you start up your own business, you have the power to hire whoever you want. It’s not like when you buy a business and the employees come with it. You can interview multiple candidates and hire the one that fits your needs and wants.
While starting your own business is a lot more stressful for most, it’s also extremely gratifying. You can build your own company culture from the start versus potentially changing an existing if it doesn’t jive with your core values and ethics.
Regardless of if you buy an existing business or start your own, be aware that you will have success and failures. There will be days you don’t want to go into the office, and nights that you simply don’t feel like grinding it out to finish up a project. You’ll have to make the tough decision to let people go and welcome in new faces to your business. Whether you win or lose, everything is riding on your shoulders. It’s stressful. It’s tiresome. But, it’s so worth it in the end. Play the long game versus short and you’ll outlast your competition. I wish you the best of luck in whichever direction you decide to go. The hardest step you’re going to take in this process is the first one.
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