Start-up vs. Existing Business

When you are looking at working for yourself or investing in a new and exciting business venture, all of the choices make it very confusing. However, there is one really good answer – get an existing business.

Although start-ups may be exciting and relatively inexpensive at first, there are a lot of unknown factors and a lot of beating the streets required to make these new ventures functional and prosperous.

Existing businesses do just that. They already exist and hopefully are thriving. Someone else has already done a lot of the legwork required to make them operational and a proven success.

• Customers – Although you will work to expand the client base, there are already tried and true customers that love the business and keep coming back. Start-ups have to go out and find their customers from the beginning one and a time over a period of years.
• Suppliers – Existing businesses have working relationships with reputable vendors that provide them with quality products and services. Many start-ups have to search out and form relationships with new vendors.
• Risk – With an established business, a lot of the risk has been removed from the picture. It already exists and has proven itself successful. Start-ups may be cheaper, but the concept is unproven, unreliable, and may cost more when/if it fails.
• Cash flow – An existing business is at a point where the owner can take a salary, cover any debts, and reinvest in the business. A start-up is just that…starting up. Most start-up owners starve for the first two or three years while trying to establish their business.
• People/Staff – The greatest benefit of buying an existing business can be the experienced staff that comes with it. These are trained individuals that have helped to make the company a success and can run it in your absence. With start-ups, you are the only staff. If you get sick, so does the business.
• Your Focus – With an existing business, you can immediately focus on the running and improvement of the business. With a start-up, you spend more time focusing on starting up the business and requiring all the necessary elements to make it functional.
• The Brand – You are buying the brand name of the company and all of its established clientele, goodwill and community connections. This is a great foundation for attracting new business or making “cold” sales calls.
• It’s been proven it works! – The concept or idea is tried and true. There is a financial track record that you can take to the bank to secure financing. Start-ups lack this which makes acquiring working capital difficult.