Advantages And Disadvantages Of Buying And Starting A Business

Whenever someone plans to start their business venture

, they always wonder whether they should start a new business or buy an existing one. If you do an online search you can actually find many topics relating to this question. Each and every entrepreneur has their own unique business plan and their needs. When one dreams about starting a business which represents him/her then they start up a company from scratch no matter the hardships.

Whereas when an entrepreneur is looking to start their business with a good boost then they prefer to buy an existing business. Below well discuss some advantages and disadvantages of starting a business from scratch or buying a new business.

Starting a Business from Scratch

Advantages-Starting a new business gives you freedom; you dont feel restricted or have to follow other regulations. Your new business will have clean inventory, history and also comes with the excitement of starting something new that represents yourself. You will be the one who get to decide the name of your business, your business location, your employees, equipments, business design etc. If your business becomes successful then you will get a satisfaction knowing you were the one who did it all. Starting a fresh new business is the lowest cost approach to getting into the business industry.

Disadvantages- It takes time for a new business to produce a constant cash flow. It usually takes anywhere between 6 months to 2 years to generate a steady cash flow. Also when starting a new business you have to know that there will be high competition in the business industry. Suppliers may not lend you credit as your business is brand new and you have no history whatsoever.

Buying a Business

Advantages- Nearly all of your groundwork have been done for you. It will also be quite easy to obtain finance as that existing business will have track records. If the business is in the market for years then it shows that there is a demand for the product or services provided by the business. Existing business will also have a well established business plan and marketing strategies. A customer base will be there so that you can generate some steady flow of income since day one. Existing employee of the business will also have experience in the field. Many problems would have been discovered and solved already.

Disadvantages- It requires more amount of initial capital to buy a business than starting a new one. Current staff may not be too happy with the new business owner or the business was running badly which results in low morale. You should have a good knowledge about the industry in which the business deals in or else it can emotionally drain you. You have to know the daily workings of the business and follow the business plan. You would often have to invest large amount of upfront and will also have to budget for professional fees for solicitors, accountants, surveyors etc which are related to your business purchase.

by: Rebeca

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