To Start Your Own Business or To Buy One: What’s the Better Choice?

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Written by TeamIdentity

At the end of the day, both are viable options for getting into entrepreneurship.

Becoming an entrepreneur is an exciting but challenging endeavor, one that will be filled with difficult decisions around every corner. One of the most important choices you’ll make early on is deciding between buying an existing business or starting from scratch. Both of these options have their pros and cons, so let’s dive into the most important ones to consider.

Buying a Business

Purchasing an existing business is a great way to get started because you’ll already have everything set up. The business has established operations, there’s already cash flowing, and it already has employees and equipment set up.

All you really need to do is continue running the business and making improvements as you go along. You’ll continue to generate money from the business and you can keep hiring new people if needed to grow the business more.

However, even if you’re working with business advisors who can net you a great deal, there’s a much higher initial cost to buying a business. You’ll need to carefully assess the financial implications of buying a business and ensure that you have enough capital to both buy the business and continue funding it.

You should also think about why the owner is selling their business.

Perhaps it’s a perfectly fine reason such as wanting to retire or because the business is too much work for them. However, there’s also the possibility that the business isn’t working out for them, or they might predict a long downward trend for their company. As such, you must examine the possible reasons that the business is being sold so that you don’t end up making mistakes.

Starting a Business

Starting a business gives you much more creative freedom because you get complete control over it. Whether it’s the vision, the branding, or just the general direction of the company, you get to make all of the decisions from the beginning. You can also start a business for much less money than if you were to buy one, and you can build a team of people from scratch that you enjoy working with.

However, starting your own business comes at a much higher risk. It takes much longer for your business to become profitable, and it’s far more unpredictable because you’re usually going into the industry with new ideas and untested products.

Financials

A lack of a track record also makes it hard to secure more financing, and you’ll struggle to build trust with both customers and suppliers. It’s also difficult to gain traction and foster growth, especially if your ideas are similar to other companies in the industry.

So while starting a business does give you more control, you ultimately need to spend more time and effort on it. This all comes at a much higher risk too, so it’s definitely not for people that prefer predictability.

At the end of the day, both are viable options for getting into entrepreneurship. However, the biggest limiting factor will likely be how much capital you have to start your business. It’s cheaper to start from scratch, but much less risky if you buy a business.

Photo by Christina @ wocintechchat.com on Unsplash

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TeamIdentity

Our mission is to empower women to "Get All A’s in their Game of Life" by discovering their powers and transforming through Self-Acceptance, Appreciation, and Personal Achievement—through all of our content and collaborations.

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