If you are looking to go into business for yourself in 2016, you may be wondering if it is better to buy an existing business or start your own. Both have advantages and drawbacks, here is a closer look at each approach:
Starting a Business: The main advantage to starting your own business is the cost. In the beginning, startup costs are typically lower than if you buy a business that is already established. A related benefit is the ability to start small and build at your own pace. You can also be more creative during the startup phase as you have not yet established a brand or determined a specific niche to focus on. For those who want to create their own model and have the capital to invest and sustain them from startup to profitability, this may be a good option. 
The downside to starting a business from scratch is the time it takes to get it off the ground. Typically, it will take several months to several years to reach the point of profitability; and during that time, expect to put in long days and in many cases, not receive any kind of salary.
Buying a Business: The upfront costs of purchasing a business are certainly higher than starting your own, but if you have the capital to invest and/or are able to obtain financing, there are several potential advantages, including:
- Proven Business Model: With an existing business, someone else has already laid the groundwork, established processes, tested and tweaked those processes, and created a business model that works. This allows the buyer to come in and save untold hours of time and frustration they would have had to endure creating such a model from scratch.
- Established Customer Base: With an established business, you inherit an established base of customers/clients. This allows you to focus on growing your customer base knowing already what demographics prefer your product/service and how to market to your target audience.
- Branded Product/Service: When you buy an existing business, you buy an established brand and instant goodwill within your community. It takes time to build a brand and a reputation, and an existing business allows you to benefit from the branding done by the previous owner.
- Employees: Good employees are hard to find, and they are the lifeblood of any business. With an existing business, you inherit employees who have already been hired, trained and have experience on the job.
- Instant Cash Flow/Profitability: Perhaps the biggest advantage of an existing business is the ability to receive an income immediately, assuming the business is profitable.
Though buying an existing business offers several potential benefits, there are risks involved as well. Not all businesses (and industries) are created equal. For this reason, it is essential to do your due diligence. To save time, it is best to work with a business broker with particular experience in the industry in which you are looking to enter. A business intermediary is able to locate the best available businesses based on your desired industry and location, so you will have a better chance of finding the business that best fits your passion, skills and budget.
