Buy or Start a Business?
Many aspiring entrepreneurs ask the same question: Am I better off purchasing an existing business and improving it, or should I build my own from ground up?Buying a business offers some clear advantages. You enter the scene with a framework — inventory, employees, a business model, cash flow and customers already in place. There’s a history, so you can better predict how the business will perform early on.
Starting from scratch, on the other hand, can mean months of sorting out details. Where will you be located? What products will you offer? How will you advertise? But there’s a big upside: The chance to design a business that’s far more profitable than one already established.
Julie Ruhlander, in Santa Ana, Calif., pondered the same question in 1991, when she considered starting a mail-order clothing business for seniors or buying a similar business she found in the classifieds. She pored over the business’s financial records and spoke in depth with the sellers. She did a complete cost analysis, comparing her estimated start-up costs with the acquisition costs and then forecasting which business would generate the best total return and biggest profit margins.
Greg Balanko-Dickson on March 17th, 2006 7:53 am
In a generally good story, Kelly Spors makes a error in her material facts.
The error in material facts is when she states “Other studies have shown that as many as nine out of 10 start-ups don’t last beyond five years.” This statement is a complete myth and cannot be supported with any research.
I would challenge Kelly Spors reveal her source of the ‘other studies’ that support her unsupported factoid. It is a disservice to the small business community to recycle unfounded myths.
The Good News: The article is not entrely inaccurate. When I researched business failure statistics for my book Tips and Traps When Buying a Business, I then published 15 Reasons to Buy a Business vs. Start One from Scratch. The one statistic that she used and whose source she cites, comes from the SBA: “Only 44% of start-ups survive four years, according to the U.S. Small Business Administration.” I have been able to confirm that the SBA stats to be very close to those published by Dun & Bradstreet. So with two sources, that information should be fairly reliable.
We should be able to expect more from the Startup Journal, shouldn’t we?
Business Performance Coaching » Get Your Facts Straight WSJ: Startup Journal on March 17th, 2006 7:57 am
[...] Via Business Opportunities Blog: In a generally good story, Kelly Spors makes a error in her material facts. The error in material facts is when she states: "Other studies have shown that as many as nine out of 10 start-ups don’t last beyond five years." [...]
cassy on December 21st, 2008 10:30 pm
For me i better start and plan my own business,and start it with hard work and do all my best to make it grow and become a big business, than buy a business which im not sure if it works or a profitable one.
Leave a Reply