The Big Question: Should You Buy an Existing Company or Create Your Own?

Updated: Jul 22


 Buy an Existing Company or Create Your Own?
Buy an Existing Company or Create Your Own?

Finding the best path to achieving this will be your first challenge; should you start a business from scratch or buy one already operational? Deciding to become your boss is frequently a lightbulb moment.

Both options have advantages and disadvantages; while start-ups have a higher failure rate, buying the wrong business could be just as disastrous.


Potential Losses in Investment

It's no secret that there are many more potential downsides to your wallet when you start a business than when you buy one.

Banks are more likely to lend money for business purchases even though they typically require a much larger down payment. It is necessary, however, that the company be trustworthy. Financial instability makes it difficult for a business to secure a loan from a financial institution.

While the upfront costs of starting a business will be lower than those of p an established company, the risk involved in doing so will be much higher.

Here, your decision will be heavily influenced by your personality type, with risk-takers more likely to clench their fists and get going and cautious types turning their attention to the yellow pages.


Creativity

Although purchasing an existing business does not provide you with a blank slate, it allows for some creative input over time and, most importantly, provides you with a preexisting brand.

Conversely, a start-up may be a better fit if you enjoy and are good at branding and innovation.

While it's possible to rebrand an established company, doing so could be more complex than starting from scratch with a clear vision (especially if it is doing well).

Remember, though, that when you buy a company, you get more than just the products or services. Computers, CRM systems, custom procedures, strong relationships with vendors, etc., all fall under the allis category. Now that the fundamentals are taken care of, you can direct your efforts toward growing your business.


Work history

An excellent strategy for those with limited experience in their target field is to purchase an established company in that field that already has a stable revenue stream and well-defined processes in place.

You'll need industry expertise and a deep understanding of financial management if you want to launch a successful business from scratch.

Think about how the acquired company's current staff can help your business grow. Instead of recruiting, hiring, and training new employees, you'll have access to a team that is already familiar with the company's culture and procedures.


Compliance and hidden issues

Concerns about the true motivations behind the business's sale could be a deal-breaker. If due diligence is performed correctly, concerns like these about the company's foundation shouldn't be hidden.

During due diligence, a buyer can examine the company's financials with the aid of an attorney. Because of this, the value of the company can raise.


However, the due diligence financial statements should not be the only basis for valuations—Financial information problems within the company, such as rising market competition.

Moreover, issues could exist with already present staff. Some employees will likely resist you've purchased the business.


If you’re researching starting a new business or buying one, Book a Session!


By: Helia Mohammadi

Social Media Specialist

Adicator Digital Marketing Agency

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