Is It Better to Buy an Existing Business or Start Your Own?

Entrepreneurship is the dream job of most professionals who find themselves stifled in the controlling and stressful corporate routine. Working for others is highly dissatisfying for passionate individuals brimming with enthusiasm and ideas. Most wish to break away from the restrictive environment and centralisation of power. Thus, they plan to take their destiny into their control and build an entity that excites them and fulfils their goals.

However, they are confused between starting-up and buying an established venture with an existing set-up. Let us help resolve this dilemma by assessing whether buying an existing business or starting your own is better. The pros and cons of each option will help you make an informed entrepreneurial choice and enjoy the perks of your decision.

Factors to Consider When Buying An Existing Business

If you decide to purchase a business for sale in Perth, you need to be prepared to step into the shoes of the outgoing owner. It may take some time to get used to processes and procedures, but it saves the time and effort of starting up. Here is everything you must know before buying a business.

1. Well-Established Business With Cash Flow

Taking over a business for sale helps the new entrepreneur to adopt the proven business model and take advantage of the accepted processes. It reduces the risk of failure because the entity has been operating successfully for several years. In addition, the new owner does not have to wait to break even and generate profits.

They can start earning from day one with a positive cash flow. Entrepreneurs can access the business plan and have everything in place to focus on growth. It becomes easier to achieve financial targets with a sustainable business. Also, getting funds for the acquisition is much easier because the business is already running and has financial data to prove its feasibility.

2. Brand Awareness and Loyal Customer Base

Usually, business owners have to spend a fortune on marketing and creating brand awareness. However, with an existing business, they do not have to spend a single dollar on brand recognition and gaining visibility. Also, they have a loyal customer base that continues to purchase from the brand and brings the desired income.

The new entrepreneur has to maintain relationships with loyal clients and serve them effectively to retain them and get referrals. The existing customers can also be used as brand advocates for word-of-mouth publicity in Perth, Qld.

3. Existing Fit-Out and Infrastructure

Business acquisition reduces the effort and time spent finding an easily accessible and visible commercial property. It saves the investment on fit-out and buying equipment for the office. The transition process helps to get accustomed to the plant and machinery and understand the working mechanism under the guidance of the outgoing owner.

4. Trained Employees and Known Suppliers

Another advantage of business buying is that you have a well-trained and experienced staff in place. They are familiar with the policies and have been working on the projects. They do not have to be taught or trained. In addition, the business will have an established supply chain system, so there will be no problems with stock management, production, packaging and distribution. The new entrepreneur can leverage the long-term relationship with the suppliers to reduce the cost of inventory and enjoy favourable payment terms.

5. Follow the Existing Workflows

When you acquire a business for sale in Perth, you must adhere to standardised operating procedures. It can limit your creativity and enthusiasm to create your own norms and functions. Individuals who like to work on their own terms may find it challenging to follow the lead of the outgoing owner. They may have to deal with a mismatch of ideologies and face resistance to organisational change from the team members.

Factors to Consider When Starting Your Own Business

If you wish to start-up, you need to work hard to build an entity from the ground up. It requires a lot of planning and involves risk because of the high probability of failure. Here are the points that must be kept in mind while starting-up.

1. Create An Innovative Product or Idea

Starting a business allows the entrepreneur to give wings to his imagination and work on novel ideas. They have complete control over the structure, size, type, market segment and business model. It offers flexibility and the ability to create your own path and build a decentralised structure with hierarchy and delegation of work.

They can choose the location, equipment and prepare the business plan as per their needs and understanding. It gives them an opportunity to explore their creative side and accomplish their goals without intervention from any authority. They are empowered to take charge of the entire set-up and its functioning.

2. Substantial Investment With No Instant Returns

A downside of starting-up is the risk associated with the opportunity. It requires a considerable investment that goes into market research, leasing property, building the fit-out, buying equipment and furniture, recruiting talented employees and marketing the products and services.

They have to keep putting money into the business until it starts generating profits, which can take years. Thus, they need to take out a substantial loan and invest the remaining amount from their savings. Also, it is difficult to secure funding for start-ups because of the risk of failure.

3. Market the Business and Build the Brand

When starting a business from scratch, the biggest hurdle is to market the business and invest in brand-building activities. The entrepreneur has to undertake all types of marketing initiatives to make the brand known in the cluttered marketplace. It requires a 360-degree promotional strategy that continues until the customer base is established.

The business must present itself as a reliable entity and inform the customers about its vision, mission and goals through targeted marketing messages. With no income in the initial years, brand building can be draining for the business.

Wrapping Up

Entrepreneurship is enticing for all working professionals and creative individuals. However, they need to identify the right path based on the factors mentioned above. They can choose to set up a business or purchase an existing one according to their needs.