If you have an entirely original idea for a product or service, you should definitely consider starting your own. But other would-be entrepreneurs just want to run the best business around, whether that means buying one that’s already established or opening something new.
If your dream is to be a coffee queen, size up the competition to determine whether your town already has the ideal hangout or not. Perhaps the current barista has snagged a primo location, but their service leaves something to be desired. That might be your opening.
But don’t let that deter you if you are committed to starting from scratch — there are multiple ways to finance a business aside from a traditional loan. Many successful entrepreneurs fund their start-up through a combination of home equity loans, crowdfunding, credit, and investments from friends and family.
3. Do you have the necessary contacts?
A thriving business already has existing relationships — customers, employees and vendors — that allow you to hit the ground running.
However, developing your own business allows you to create relationships on your own terms. If you have a product manufacturer, you don’t need someone else’s contact. And hiring an internal team loyal to you will prevent legacy employees from constantly telling you how the old owner used to do things.
If you do decide to buy an existing company, make sure the relationships are accurately portrayed. You don’t want to assume you’re taking over a vibrant business and then learn that clients have been leaving in droves or vendors have filed complaints.
“The concept of due diligence has changed,” notes Nigel Cooper, executive director of P&MM Events and Communications. He's overseen several business acquisitions. “A prospective buyer needs to look at what is confirmed and in the current order book, rather than the financials from the previous year. In reality, the goodwill is the future of the order book, and what is happening today is key," he says.
4. What resources are available?
Whether you’re buying or starting a business, a helping hand can smooth the way. Here’s how to get started:
Research your industry. Reach out to trade organizations, your local Chamber of Commerce, and successful business owners to find out more about the ins and outs of running a business.
Network with the professional community. Rarely will a business owner stick a “for sale” sign on the company. A better bet if you are looking to buy an established business is to stay tuned in to the local market. Attorneys, accountants and bankers are often among the first to know what businesses might be available for sale.
Cathie Ericson is a freelance writer covering business and consumer topics. She creates branded content for Fortune 500 companies, and her work has appeared in LearnVest, Costco Magazine, Forbes, TheGlassHammer.com and IDEA Fitness. Follow her @cathieericson.
All content provided herein is for educational purposes only. It is provided “as is” and neither the author nor Office Depot, Inc. warrant the accuracy of the information provided, nor do they assume any responsibility for errors, omissions or contrary interpretation of the subject matter herein.
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