How to Become a Business Owner
Many individuals dream of becoming business owners. The flexibility, return, and fulfillment is all enticing reasons to become a business owner. There are three main ways to become a business owner. The first is buying an existing business, the second is starting your own business from scratch, and the third is buying a franchise. Each of these options has its pros and cons. You will need to weigh out the options and decide for yourself which option is best. Doing so is important before buying a business and/or becoming a business owner. In this article, we will discuss what each of these options looks like.
Peak Business Valuation, business appraiser, helps potential buyers understand the value of a business before buying. No matter the industry, Peak Business Valuation can help potential buyers feel confident in their business purchase. For questions or inquiries about a business valuation, click the link below.
Buying an Existing Business
There are many perks to buying a business that already exists. Buying an existing business means most of the grunt work is already complete. All you have to do is make sure it doesn’t fail from there. Let’s discuss some of the pros and cons.
Buying an existing business means you are buying something that already has a history. It has an existing customer base, with immediate cash flow, and reduced risk of potential business failure. More often than not, before you buy the business, the business already has contracts with vendors and suppliers. It also typically has a set location and trained employees who know how to do their job. This can make the transition much easier when becoming a business owner. Oftentimes, the previous business owner will stick around to help with the transition until you get your feet under you.
However, there are cons to buying a business. Buying a business that already exists comes with high costs. While it is possible to get financing such as an SBA loan, you will still need to supply a down payment. Another potential con is the possibility of hidden problems when buying an existing business. To avoid problems like this, consider receiving a business valuation on the business before buying. A valuation will analyze each aspect of the business and provide detailed information on what is really happening inside the business. This includes the strengths, weaknesses, and risks of the business.
A third-party company like Peak would be happy to help. Peak Business Valuation, business appraiser values companies across the nation. We help potential buyers feel confident in the purchase price of the business. Schedule your free consultation today.
Starting a Business From Scratch
The next option for becoming a business owner is starting from scratch. Starting a business from scratch comes with a very different set of pros and cons. Often starting a business takes hard work, long days, and a lot of determination to come out on top. Let’s talk about the highs and lows of starting a business.
There is a certain level of satisfaction that comes from starting a business. The business is completely yours and exactly what you want. It gives you the control to change or implement things that you like and feel would be best for the business going forward. Starting a business can also come with lower costs. Starting your own business means not paying for existing clientele. Depending on the industry, you can do it from the comfort of your home and choose the environment you want to supply for your customers.
Starting your own business comes with much more risk. You will need to be comfortable not having cash flow until the business is up and running. Banks tend to be wary of supplying loans to start-up companies. Taking the time to create a solid business plan will be essential in securing a loan. Another con is the lack of loyal customers. Building up a clientele takes time and lots of it. But not only that, you will need to hire employees who are willing to work in the risky situations of a start-up. To some, starting a business has more cons than pros. But to those who come out successful, their reward is great.
Buying a Franchise
Last, becoming a business owner through buying a franchise. A franchise is somewhere in between the first two options. It comes with its own unique set of problems and responsibilities.
A franchise already has a good name for itself. By owning a franchise, you get the benefits of advertising from the first day you own the franchise. You also get a set business plan and training to ensure the success of your location. Another advantage to buying a franchise is you usually have the option to pay the bulk of the start-up costs over a period of time. This can help you avoid going to a bank or lender for a loan.
Franchises can be risky. Thousands of franchises are up for sale as we speak and most of them are not worth buying. Often there are very high fees associated with owning a franchise and long contracts. Once you have signed the deal, it is hard to get out of it. Franchises also have strict rules with little flexibility on how to run the business. You have to present your franchise exactly how the franchisor wants it. Overall, your franchise represents a little piece to a big puzzle.
To become a business owner, you must first determine which route you would like to pursue. Buying a business, starting a business, or buying a franchise are all great options. Each comes with unique responsibilities and requirements. Some may feel passionate about being different or unique, while others just want to earn a good return. Take the time to study each option and make sure you feel confident in your decision.
Peak Business Valuation, business appraiser, helps potential buyers feel confident in their business purchase decisions. No matter the route you take, Peak can play a vital role in your success. We provide business valuations for buying a business and business valuations for buying a franchise. For more information, please contact us by scheduling a free consultation.
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