5 Things To Ask When Choosing To Start Or Buy A Business
So you have to decided to become a business owner. You can start visualizing yourself wearing that power suit having working lunches with the lynchpin of multinationals at posh restaurants.
The decision now is whether to start your own business or to buy one.
The capital required to do either is more or less in the same bracket. Most people might assume that buying an existing business would be more expensive. But that is often wrong as most people perceive a ready-made business to be a successful one. If we put it that way, why would the owners of a successful business cash out?
This is why the businesses that are bought out by individual owners are often those that are not really performing that well.
Now, you might ask again, why buy a business that is not doing well? Obviously, the buyer feels that he can turn it around. Many times it is just a change of direction that is needed.
Just look at how football teams can turn their seasons around just by changing a manager. They have the same players, but a new manager is often able to get the same resource to extract a better output. Does that convince you? No? What about the fortune 500s who change CEOs when things don’t go well? I’m sure you will get it now.
There are, of course a lot of advantages in starting your own business from the onset. And when choosing between starting and buying, here are some questions to ask yourself to find the most suitable choice for you.
1) How good are your selling skills?
Many home based business opportunities require you to sell. In fact, it wouldn’t be that far fetched to suggest that you need superb sales skills in order to excel in most of them.
Essentially, if you have a great resume as a sales superstar, all you might need to make a bucket load of inky money could be to sign up for one of those home based opportunities like a multi-level marketing project.
Many businesses don’t sell themselves. Sales staff, and ultimately yourself if you are starting yourself as a lone ranger, have to take on the challenge of selling to generate revenue for the company’s survival.
But if you completely suck as selling, it’s not something to be ashamed of. Some people are just naturals and some people just cannot be trained to do sales. In this case, you will need to hire or embrace the sales staff of the business you are taking over.
Overall, how good you are at closing and how much you love to do it, will greatly affect the choice you make to build or buy a business.
2) How stubborn are you?
There is never just ONE way to conduct a business. If there is, everyone who attend business school will be megastars in the world of commerce. Different captains of a ship will navigate and ride the wave their way, and still eventually arrive at the docking float. So there is always more than one way to operate a business effectively.
The drawback of buying into businesses, for example a franchise, is that there are always a full set of rules and policies to follow. This might not be suitable for individuals who have a very stringent way of thinking how things should work. It limits the space your managerial instincts can work with.
You will probably be better off to start from scratch if you have a high level of stubbornness. This way, you can destroy your own business with your own ideas. Just kidding.
3) What are your financial goals?
I’m sure some people will think that this is an obvious answer. The answer is “as much as possible”. But how that comes about can greatly affect your choice of options.
Some people will be more than happy to declare themselves as financially free with a recurring income of $5,000 a month. While some will refuse to draw a salary and sees the payoff when they sell the business as the ultimate end-game.
There’s no right or wrong answer. And what your answer is does not reflect how ambitious you really are. It’s just a matter of personal preferences and outlook.
Honestly speaking, if you intend to make a modest recurring income without needing the recognition of being the boss, an internet business might be all you need. And who knows, even internet businesses can become global powerhouses in the corporate world.
4) How much recognition do you want?
As I said earlier, if you do not have a need to be famous, a modest home based business could be all you need.
But many people want more than that. They want their brands to be known nationwide, if not globally. They want to get on the cover of financial magazines. They want to leave a legacy which people will remember them for. And they want to be quoted on the internet even when they are retired.
The choice to make after you answer this question is as clear as day.
5) What is the end game in your mind?
Do you want to eventually sell the company for a billion dollars like Instagram? Do you want to be the darling of venture capital funds while calling the shots like SnapChat? Do you want to be a mainstay in the industry and never sell like Warren Buffet? Or do you just want to make enough to cover the retirement funds that you need?
All these questions will help you decide what to get into. The irony is that most people do not ask themselves these easy but thought provoking questions before splashing the cash.
What’s most important to note however, is that once you make that decision to either buy or startup your own business, you need to commit yourself to follow through. Both options can bring success if your bring your passion and expertise to the table.
Many of the most successful businesses are built with nothing but passion. Because once you learn how to apply it to what you do. You will be resourceful enough to find the solutions of every problem you face.