Start a New Business or Buy an Existing One?

This is a typical yet very puzzling question you will commonly hear for a business neophyte. A good practical answer is “it depends”. Here are the three reasons to support this answer.

First, it depends on the nature and the kind of business you have. There are businesses where it takes long to develop products and markets for example, trading in general. In this case, you may be better off buying into a company that already has established products in the market but for some reason or another also needs fresh equity or fresh approaches. There are also other businesses where “teething” takes time as in manufacturing operations in general; putting up a new plant and training a new set of workers may be relatively more expensive than acquiring an existing plant.

For businesses such as an online digital printing company, the operations may be essentially good and the capital for building a website is not that costly, and a new marketing approach on how to gain more customers well and how to market your postcard printing services for instance may be the only inputs that could improve its viability.

Second, it depends on the availability of opportunities for acquisition.

If you are sufficiently interested in a business but figure out that you do not have the best personal preparation for it, may be better for you to get into an existing operation with the option to learn the ropes and gain control of the business at a later date. But looking for actual situations that will allow you to apply this strategy may be difficult. You can always look at classified advertisements for opportunities, such as banks and other financial institutions, or companies being sold, or consult other business professionals-but be prepared for disappointments.

Third, it also depends on your personal biases. Do you want to have the satisfaction of building a new organization, or would you derive greater satisfaction in being around a company that has been losing? Can you also cope with the usual “bad habits” that employees in established organizations bring with them? Would you rather develop a new team within a new organization?

Now, are you ready to answer the above questions?

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