Owning a business is about managing risk: Purchasing an existing business minimizes risk
Entrepreneurs dream of finding that special idea, concept, product or service that will captivate their imaginations to start their own business….
But waiting for inspiration has kept many qualified would-be businesses owners on the sidelines.
From my experience,
owning a business is not as much about which product or service your business offers as it is about owning the business!
The entrepreneurial creative juices can be applied to any business, so why wait and hope for that unique idea or concept to present itself to you?
Seize the day and buy an existing business!
You will be surprised at how much less risky it is to purchase an established business.
As regular readers of this column know, I started my own business at a very young age. I worked for a company manufacturing a product, liked what I was doing and felt I wanted to be on my own to take a shot at the “big” dream and own my own business. Let’s analyze the risk I assumed…
I was 24 years old, married (Mary Jane was a schoolteacher), with no children yet. I started the business with $4,000 in savings. My risk at the time was not very high. If my idea didn’t work out, what was lost? Time and money, of course, but at 24 years old, recovery is a lot easier than at 34 or 44.
Think how my risk would have been different if I had been older – let’s say with children and a mortgage – when I contemplated starting a business. Put simply, I would have either not gotten into business ownership or waited for that sure thing (which never comes around) to minimize my risk of failure.
Let me remind you that I love business! I am a business geek!
Some businesses are more exciting than others, but at the end of the day … it’s business and I love it!
My experience taught me that no matter what type of business, the tools you have in your toolbox are what make the difference.
Business is about marketing, finance, accounting, economics, sales, hiring, firing and managing people.
It’s about sweating the details, working hard, focusing on the ball and advancing down the field.
It’s about digging in and thinking about solutions when times are tough and having the stamina to implement the solutions.
It’s about learning what you didn’t know and learning from your mistakes.
If those are the things that drive your entrepreneurial spirit, you must consider buying an existing business.
In the previous paragraph, not once did I mention that my dream was about printed envelopes. It was just about business. All businesses have that need for owners with the skills to drive the company forward.
Buying an existing business allows the buyer to see a track record of performance and quantify the strengths, weaknesses and corresponding risk. On the contrary, the probability of failure is highest when a new business is started.
Furthermore, financing is available from several sources for established businesses with positive cash flow if you buy an existing business. Conventional banking, the Small Business Administration and even some modest seller financing can help a qualified buyer close a deal.
The key to any good business transaction is risk reduction. Entrepreneurs should feel empowered to fulfill their ownership dreams with minimized risk by buying an existing business. Also, examining past performance helps the entrepreneur stratagize what can be done differently to produce different results. Taking the leap into business ownership from an established platform reduces risk and can provide substantial rewards more quickly than starting a business from scratch.
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