Starting a business vs buying a business: Which is better?

Your entrepreneurial side has always dreamed of running a company. Now, you’re in a position to make this happen, and you have numerous routes to choose from.

You could start a new business from scratch, creating your own identity, brand and methods. Or, you could purchase an already established company and put your own spin on it. The truth is that there are pros and cons to each of these avenues. Outlined below are some key points to keep in mind.

You don’t want to stay static

When purchasing a company or starting from scratch, you are going to have to engage in due diligence. For a new business, you’ll have to consider whether or not there is a sustainable desire for your product or service. If you’re purchasing an existing company, you’ll have to ask yourself why it is for sale. Is it no longer profitable? Have competitors gained an unrivaled advantage? Is there really scope for you to make a profit from the capital that you invest?

The pros and cons of each depend on your needs

It’s not enough simply to want to run your own company and simply acquire the first business that becomes available on the market. It’s important to ask yourself the reasons why this particular business model appeals to you. Is it an area in which you have experience? Do you have the knowledge to turn things around or maintain a high standard? Is the business enough to motivate you each day to make it a success?

Ask the right questions of a seller

Before committing to a merger or acquisition, there are some key questions that you need to ask. Is there an existing team in place or will you need to build a new one? What key changes need to be made immediately? Is the business sustainable? Are there untapped markets out there?

It can help to have an objective analysis before you commit to a deal. We help prospective or current business owners with mergers and acquisitions, contact us for a consultation. We can help you analyze your options.