You’ve always wanted to own a business and go down the path of entrepreneurship. But you know starting a business such as an LLC from scratch can be time-consuming and financially draining. Maybe you should just buy an existing business instead?
If you’re looking to buy a business, it’s not as simple as making the purchase and then sitting back and collecting revenue — if only it were that easy! This article will help you understand a bit more about what to expect when you buy a business, as well as look at the other side of the spectrum: maybe you’re better off starting your own.
What Business Should You Buy?
The simple answer should be one that you are passionate about and have the skillset to control and grow. If your background is in apparel, then it wouldn’t be wise to purchase a business that deals with car audio installation. Makes sense, right?
Even if you find a business you’re passionate about, you need to consider many factors before deciding to part with your money. Where is the business located? Is it in a high-density part of town, or an area that doesn’t get much traffic? If you’re considering an online business, what do its visitor numbers look like? Are you able to take this business to the next level with your own abilities?
Think about the financial aspects as well. Is this purchase a good deal? Is the company worth way more than what they are asking, or are you overpaying? Is this business something you plan on tackling full time, or will it be a “side business?” This can help you determine your commitment level: how much time and money are you willing to invest in order to help it grow? How much revenue must you bring in to pay the expenses and still profit at the end of each month? These are all things you should be thinking about.
Something else you should be familiar with is the competition and landscape of your market. Is the market as a whole showing growth, or is it slowly dying? If it looks like this market is in a downward spiral, do you think it’s a good idea to buy a potentially sinking ship? If the market is booming and the business is doing well, what is its growth potential?
Wins and Losses Are at the End of Your Bat
In baseball, you can swing the bat and score the winning run, or you can strike out and lose the game. Ultimately, business is the same way. You will have success just like you will have failure. Regardless, you need to be willing to stand in the batter’s box and take a swing every day of the week…not just the days you feel like it.
You need to be prepared to add value when looking to buy a business — even if the business is already doing well. Now is not the time to get complacent, let your foot off the gas pedal and allow your competitors to sneak in.
Are there new markets you could gain entry into? Brainstorm ideas and write down the necessary steps you plan on implementing to further the business’ growth. Create a timeline of when you want things completed and how you plan on capitalizing on these changes. What will your marketing strategies be? Are you improving upon an existing service and need to share these changes with your existing customers? How will you spread the message on social media? Be prepared to add value to the customer experience.
Also, consider changes you may have to make from the start. How are the employees that came with the business you purchased? Are they hard-working, or are they lazy? You could get rid of the cancers among the group, but that can create an environment where your employees are wondering if they’ll be next to go. You need to quickly figure out who your leaders are and who is keeping the business from moving forward.
Come Out of the Gate Running
The last thing you want to do when you buy a business is to stroll through the process. Instead, you need to show your customers and competitors that you mean business — literally. Execution of ideas and strategies will make or break your company. Your transition from the previous owner needs to be as seamless as possible. I’ve seen successful businesses completely fail after new ownership comes in because the new owners decided to sit back and take things slowly (instead of going out and executing immediately).
Keep an eye on your competitors as well. Don’t lose sight of what they are doing and how it will affect your business. Be proactive instead of reactive when it comes to your business. Make the necessary changes early on to keep your competitors from swooping in and stealing your share of the market. The industry is always changing and evolving; you need to have your finger on the pulse so you aren’t left behind.
Managing your business and staying on top of everything can be time-consuming, and this isn’t always time well spent on trying to grow sales. For that reason, Incfile offers services to help manage your business. If you feel this would be beneficial as you get started, their highly trained staff would be more than willing to help you.
Putting Yourself in Position to Win the Race
Business is a marathon, not a sprint. Those who sprint lose momentum and eventually fall behind. You need to put yourself in a position where you’re in it for the long haul. Don’t try to skip steps or rush things; be methodical in your actions to see the growth you desire.
To start strong, there are two things you should absolutely do the minute you buy a business:
1. Use Social Media to the Fullest
Right now, you have an extremely robust free marketing tool available, and it’s called social media. There’s no other platform where you can promote your brand for free and get out in front of thousands (if not millions) of potential customers. Create business pages on the social platforms where your audience is, and engage with them constantly. If a page already exists from the previous owners, look at what strategies they implemented and make any appropriate changes.
2. Exceed Expectations for Value
Never over-promise and under-deliver — this is a sure way to lose business. Provide so much value for your customers that they never want to consider doing business with anyone else. Figure out what your customer’s needs and wants are, and then deliver that (and more). Going the extra mile and showing you care about your customers will help build strong brand loyalty.
How to Know If You Should Start Your Own Business
Maybe when reading the above, you weren’t too keen on potentially taking over a money pit or fixing potential problems of someone else’s business. In that case, you may want to consider starting your own business rather than looking to buy one that already exists. Incfile has a ton of great resources to help you form your own business.
Taking over something that someone else built isn’t for everyone. Personally, that wasn’t the direction I wanted to go when I started Weik Fitness. I love the process of building something from the ground up and getting my hands dirty making something successful. While I appreciate those who buy a business and continue to build upon the foundation someone else created, it’s not something that excites me personally. I love the satisfaction of seeing my own strategies implemented and helping grow the business. I also enjoy the failures and hiccups that come along with starting your own business — it forces me to stay sharp and willing to change plans when things don’t work out.
When you start your own business, you have the power to hire whoever you want. This is very different from buying a business and getting the employees that come with it. If you’re starting from scratch, you can interview multiple candidates and hire the one that fits your needs and wants.
While starting your own business is a lot more stressful for most people, it can also be extremely gratifying. You can build your own company culture from the beginning instead of adapting one that may not jive with your core values and ethics.
Regardless of whether you buy a business or start your own, be aware that you will have success and failures no matter what. There will be days you don’t want to go into the office, and nights that you simply don’t feel like grinding it out to finish up a project. You’ll have to make the tough decision to let people go and welcome new faces to your business.
Whether you win or lose, everything is riding on your shoulders. It’s stressful and tiresome, but it’s so worth it in the end! Play the long game and you’ll outlast your competition. I wish you the best of luck in whichever direction you decide to go — the hardest step you’re going to take in this process is the first one.