Weighing Your Options: Start a New Business or Buy an Existing One

Posted On: / By: Brian Knoderer
Buying A Business

A new year is on the horizon. If owning your own business is one of your goals for 2021, then it’s valuable to sit down and weigh your options. After all, about 50% of businesses with employees fail by their fifth year. While it’s certainly not impossible to start your own company, it is incredibly valuable to understand your options and the risks associated. In this article, we discuss the pros and cons of business purchases vs. business startups. Read on to determine if you’re better suited to start a new business or buy an existing one.

What’s Right for You? Determining Whether to Start a New Business or Buy an Existing One

When you picture business ownership, you likely imagine dreaming up a brand new concept and brand. While it’s certainly possible to build a business from the ground up, numerous aspects work against you with a new startup. For many, purchasing an existing business can be just as satisfying, with less risk involved. Ensure that you understand the risks and benefits of these different paths.

Starting a Businessclose up of man clasping hands

Do you want to do something in a way that’s never been done before? If you relish the thought of building something independently and holding ownership of every aspect of your business, then a startup may be the right choice for you. This option can also sometimes allow you to keep things on the cheaper side. Opting for a home-based business or slowly scaling up your side hustle can keep your startup costs more manageable.

Of course, the downsides of starting your own business are relatively well known. You’re building something new, which means you don’t have an established customer base or brand recognition to fall back on. Plus, when you do need financing options for your new business, it can be harder to gain approval without a track record of proven success and cash flow. There are numerous challenges and potential problems that can derail a new startup.

Buying an Existing Business

If you’re eager to step into a leadership role and be your own boss, you may be better suited to hit the ground running with an existing company. The first step is usually to determine what type of business suits your interests, skill set, and lifestyle. Once you have a general idea of what you’re looking for, you can start browsing businesses for sale.

Purchasing an established business requires more capital upfront. Still, it’s generally a faster process to success because you’re able to skip some of the learning curve involved in starting a business. Whether you’re taking on a successful small business with a proven track record, or know that you have what it takes to turn around a company that’s struggled to adapt after the pandemic, there are numerous rewards to purchasing. The existing customer base and brand allow you to get started on day one.

You’ll want to go into ownership with a clear picture of your long-term goals and business plan, and you should still be prepared for some bumps in the transition period. However, for many business owners, these challenges hold significantly less risk than starting new. For many, the positives of purchasing an existing business outweigh the negatives.

If you’re considering entering into business ownership this year, the professionals at Sunbelt Business Brokers are here to help. As the world’s largest business brokerage firm, we can help you find a rewarding opportunity as a new owner. Contact your local Sunbelt office today for expert guidance!

Brian Knoderer is the President of Sunbelt Business Brokers. He has over 20 years of experience as a business owner and managing business transactions. As a seasoned intermediary, Brian has successfully represented companies in a broad range of industries helping business owners achieve their desired exit strategy or growth initiative.

Brian is also co-owner of Sunbelt Indiana and Managing Director of MMI Capital Partners, a franchisor focused investment banking firm.

Previously Brian was involved in several entrepreneurial ventures as well as having held corporate roles in Franchise Development for Prime Hospitality and Choice Hotels.

Brian is a graduate of Ball State University with a degree in Management Information Systems and earned his MBA from Butler University. He has received the Certified Merger & Acquisition Advisor (CM&AA) designation, holds both the Series 7 – General Security License and the Series 63 – Uniform Securities Licenses, and is a licensed Real Estate Broker. He has been affiliated with several organizations including the Entrepreneur Organization, a Member of the International Business Brokers Association, Venture Club, and a Board Member of The Entrepreneur Institute.

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