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Your Small Business Idea - Start from Scratch or Buy One from Someone Else?

Starting a business requires you to complete a number of steps and make some key decisions. Though part of your overall plan, you’ll need to decide on a business structure, and obtain the necessary licenses and permits. In addition, determining which financing options will meet your short-term needs and long-term goals is crucial.

But nothing happens until you get the idea!

Many people dream of someday owning their own business. Starting a business, however, can be very daunting. Imagine this: You are a talented seamstress and someday would like to open your own clothing shop, but have not found the time to do so. You love the store where you currently work, but always feel like you could run it in a better manner. One day, the owner tells you that she is putting the business up for sale. The price is right, and you don't have to worry about starting a business from nothing-it is falling into your lap already planned! So, is buying an existing business better than starting your own?

Remember first off that the owner is selling the business for a reason. If you work at the establishment, such as in the situation mentioned before, you probably know why the business is being sold. However, if you do not have a personal relationship with the owners, you may be left in the dark. Ask. It could be as simple as the owners wishing to retire. In this case, buying the business could be an excellent investment.


Did you know?

In starting a small business you should never think you can do it alone! One of the best ways to insulate yourself against business failure is to find and work with a mentor, someone with business experience who can guide and assist you.

A good resource are the Small Business Development Centers which can link you to organizations to help your small business grow and prosper.


On the other hand, perhaps the business is being sold because it generates no profit. If you consider purchasing a business that failed for someone else, it is important to analyze why. Perhaps there was no customer base or demand for the product or service. Maybe the owners made bad business decisions. In some cases, the business has a bad reputation. These are all things to consider when buying a business instead of starting your own.

How will you change the business to avoid your own failure? In some cases, this simply cannot be done. For example, if your community is largely made of families or retirees, there is not much of a demand for a nightclub in the neighborhood, and this may be why the previous business failed. On the other hand, you may be able to make some positive changes in a business that prevents failure. If the previous owner of your clothing store invested the company's money largely in high priced merchandise, perhaps you want to consider readjusting the business to sell affordable clothing instead.

Always consider changing the name, unless the business is a very traditional and successful staple in your community. By changing the name, you convey to consumers that the business is not the same and they should give it a try even if they have not liked the goods or services in the past. So, should you buy the clothing shop or start your own? That's a question only you can answer, but research the option of buying a business thoroughly because it could be a great chance for you to finally achieve your dreams.

About the Author: Michael Saunders has an MBA from the Stanford Graduate School of Business. He edits a Websites on Starting a Small Business and Ideas to Start Your Own Business.

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