Why should I buy a business when I can start one?

The concept of starting a business is fairly straightforward; create a product or service and sell it to you customers. In reality, there is much more nuance navigating how to structure your business, finding reliable vendors, leasing or buying equipment and property, buying raw materials and most importantly, connecting with, and making a sale to, your customers. According to the Bureau of Labor Statistics 50% of businesses fail within their first 5 years. Depending on your outlook on life, you can also read that statistic as 50% of businesses succeed over their first 5 years! A small business is extremely vulnerable when just starting out and a single bad decision can end the life of a business prematurely.

The benefit of buying an established business is that much of the ‘legwork’ of starting and cultivating relationships with customers, vendors, and employees is already done for you and the business has proven that it has a reliable stream of income. Profitability and predictability are the driving factor of why buyers are looking to acquire businesses rather than start them because they are proven ideas backed by a business with strong fundamentals. Starting a business might cost you less on day one, but over the life of the business it might end up costing you more to grow the business to the same level as you could have if you bought the business. Another option to consider is financing the purchase of a business. In some cases you might be able to put 10% down and finance the remainder of the purchase, so you can multiply your buying power and buy a business that is generating a higher level of profit. Deciding whether to buy a business or start a business is highly dependent on your skillset, level of patience and expectation of income.

In order to determine if buying a business or starting one is a better fit for you, here are some key questions to think about:

How much money will it take to start my business vs buying an existing one?
How long will it take until my business is profitable?
What is my opportunity cost from leaving my current job?
What can I do differently so that I can break into this market?
Do I know enough about the industry to compete and grow against established businesses?
What is my skillset? Am I detail-oriented? Can I manage people? Can I make a sale?

Starting a business is a noble challenge, but if the opportunity presents itself, buying a business is a way to secure your financial future and build meaningful wealth without enduring the higher potential for mortality of a business that is just getting started.

What Client’s Say

We Couldn’t Be Happier

"When we thought about selling we had no idea what our business was worth or how to go about selling. What you were able to do was to cut through the fog so that we understood the valuation issue and had a comfort level with the process. As you know we ended up selling for somewhat more than the original valuation and we got all cash and our CPA loved the way our tax liability was minimized. We couldn’t be happier!"

Over $250,000 More

"Our first contact with you shocked us when you suggested that we wait 18 months before selling because you believed that if we hit our projections that the value would be significantly greater. As it turned out we not only followed your advice but also got slightly over $250,000 more than we originally had hoped for. It is seldom that we have had the opportunity to deal with a firm that doesn’t want both money and a commitment NOW. It was clear and obvious that you had our best interests at heart."

You Got the Valuation We Agreed On

"You did a great job on the sale of our business in really beating the bushes for buyers, including a UK company that was an active suitor. You managed to get the valuation that we had all agreed upon and got it substantially all in cash and got the transaction closed with little to no problems or expensive lawyers involved."

Thank You for Handling Our Business

"Our business was smaller than what your firm normally handles but it was a BIG part of our net worth and savings. Thank you for handling our business and we were very pleased and delighted with the results."

More Than Anticipated

"Our transaction was involved as we had different corporate entities located in different states. Our only regret is that we didn’t retain your services before 2012 when we paid $25,000 to a firm in Texas that did a valuation and market analysis for us before then failing to do anything in the way of trying to sell our business. You got it sold for more than anticipated."

The Sales Process