Setting Up A New Business Or Buying An Existing?

Its a bit like buying a house or building your own?
Usually emotions take over and decisions are made for the wrong reasons.

With the failure rates for start up businesses running very high in Ireland, why do more people not try and buy and existing business? Is it that there are none for sale? Are sellers looking for too much? is there no way to value a business properly?

My own advice to anyone looking at getting started is to always consider buying first without emotion.

Here is an example:

Day 1. You decide to set up your business, you invest in your idea development, sourcing of premises, research into the market, looking for staff, looking at marketing, testing your products, focus groups, PR, sales plans, budgets, forecasts for banks, Business Plans from scratch etc…

Day 90 – Open your doors – 0 Customers, loads of good will, loads of energy, loads of passion for the business.

Day 97 – 1 week down, new customers arrive, products sold, very positive about the future and getting good response from customers. Everyone busy. Not breaking even yet.

Day 180 – just about breaking evening with running costs, no salary taken yet, things looking up but tougher than expected.
Starting a business from scratch has challenges and costs. Know them before you start.

Consider the alternative.

Day 1 you want to start a business – you look at who else is doing a similar job or who else has the same customers as you would like.

Day 7 – research all the possible businesses that could be bought and prepare a plan to approach them.

Look for ones where the business is struggling because of poor team, service or leadership but located well.

Look out for one where the owner seems to want out or where the owner is not present.

Ask if you can work for them. You will soon see the ups and downs, the opportunities and threats that exist in a business like this, you will experience the seasonality.

You will get to understand what the business might be worth.
You have not spent any money at this stage but you have invested in your education.

Seek out advice from people that can help you. Starting your own business venture does not have to mean starting from scratch, neither does it have to mean starting alone.

This is the time to make good decisions – not when you have spent a fortune.