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Should You Buy a Business or Start Your Own?

I was reading an article today about someone who was wanting to sell their e-commerce website and it got me interested in the whole aspect of businesses for sale. Since I gave up full time employment I have started two businesses. My own local web design business in Nottingham and this business, AB Publish. It has never previously occurred to me to buy an existing business.

In truth, there is no simple answer

I may disappoint the reader by not answering the question posed in the title of this article. It really is an article that examines the upsides and downsides of buying an existing business over the purchase of an existing one. In truth I do not know the answer but it is something which I think merits much discussion.

The advantages of buying a business

The tempting advantage of buying an existing business is that it immediately takes away the hard work and responsibility involved in building up a client base. As long as you continue to provide the same standard of service that the previous owner offered, you have a guaranteed (almost) income. The idea of the business is proven and you are building on firm foundations.

The advantages of building a business from scratch

So why has it never occurred to me to buy an existing business before. I suppose first and foremost is pride. In leaving a well-paid job one of my main motivations was to create something myself. To be proud of my achievement which was done through my own creativity and not living off the back of another's creativity. I do not say this to denigrate people who start in business through purchasing an existing concern, it is just an honest reflection on my own motivations.

However, my route was not without its obstacles. I had to support myself in the early days whilst I built up a regular income and this took quite some time. I also had to invest a lot of time and money in promotion as I was not well known at the beginning. All this hard work and investment might have been better used building upon an existing infrastructure.

However, I knew that I had full control over the policies and reputation of my own business and this I found soothing. I would have hated having to defend the policies and reputation built up by someone else in the event that it went sour. Perhaps I am just not trusting enough!

A question of realistic sale prices

I think another reason I avoided it was that if I bought a small business, the vendor would more than likely be a proud person and let's face it, we business owners all have an inflated opinion of the value of our own businesses. So the price of a business might be too high based on anticipated returns which becomes a bigger obstacle when you consider the risk of losing some off the clientele which can happen simply as a result of change of ownership.

So it is an interesting dilemma and the only conclusion which I can draw, is that one day I might be tempted to buy another business. It might satisfy my ego to buy one and then sieze the challenge to make it a far more successful business within a short period of time. If that worked, my ego would be well and truly massaged!

Fri 13 May 2011 10:24:37

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