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Jacquelyn Pineda posted a new Starting A Business thread on 8/23/2012

Which is better starting a business or purchasing an existing one?

I am stuck between a rock and a hard place. I have some people say to me that starting a business from scratch is hard and that I should be looking to purchase an existing business. Can someone provide their thoughts on this subject? Does it depend on the industry that you want to venture into? In my case, opening a beauty supply store.
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Victoria Smith Responded on 8/24/2012


This strictly depends on the type of business it is. The reason why a lot of new business owners purchases McDonald's or any other franchise/existing business is because they know the current business model that was built works. You have to do your research on these existing businesses and make sure their profits are worth it and does it have the opportunity of growing. I also recommend you make sure you have the knowledge to oversee the existing business as well as be prepared to make changes when required to do so. On the other end, starting from scratch takes a lot more work because you are building the foundation of a business model. So make sure this is something you have a true passion for as well as enjoy because you will spend a lot of time making sure your business foundation is strong enough to be profitable as well as help you obtain your set goals. I hope this helps..
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Jacquelyn Pineda Responded on 8/24/2012


Thanks, Victoria. This was helpful. I have someone that I can contact that will be a sort of business investigator. They will audit the financials for me to ensure I am not purchasing a sinking ship. Thanks a bunch.
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Victoria Smith Responded on 8/24/2012


I'm glad you have someone to do your homework for you. The last thing you want to do is purchase a problem. I wish you nothing but luck in this area.
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Hey Victoria, what do you think about seller financing when trying to purchase an existing business? Do you think that this is a good tool to use OPM when purchasing an existing business. Rather than using my own lines of credit and cash? Just was wondering about others thoughts on the subject. - Jacquelyn Pineda 6 on 8/24/2012

 
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Thomas Adair Responded on 8/25/2012


Jacquelyn,

As One that started and sold multiple business venture's from scratch, as long as you have experience in that industry, Scratch is the way to go. Also, finding a business that is ready to go under, is another way.


Put those extra funds into making your business more attractive for clients.

I see you want a beauty supply business. My last venture just happened to be a salon and spa. If you would like to dominate the industry, I would be glad to partner with my business model.

Thomas

thomasadair@live.com


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Iris Loterte Responded on 8/26/2012


Hello Jacquelyn and Thomas,
Thanks for this mind-opening ideas... hope to have more advices from Thomas business model. Looking forward and much hope to learn new methods.

Iris
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Though I may give adice at times, my main purpose is to find a partner to help society, the economy and change the way business is done. - Thomas Adair 91 on 8/28/2012

 
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Andrew Clarke Responded on 8/27/2012


If you are buying an existing business, make sure you have enough reserves to fund the business through the first year or two. Don't assume everything will go according to plan, because it won't. Make sure you understand why the owners are selling the business. Often owners hide information to protect their own interest. For example even if the business has been profitable for 5 years, they may have started losing customers recently due to new competitors, or for other reasons. That would not necessarily show up in the annual financials, but it will show up in the past few months' financials. Also, just because it is an existing business, don't assume their business plan can carry over to your ownership without changes. It usually doesn't.

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