Is it Better to Buy a Business or Start From Scratch?

Is it Better to Buy a Business or Start From Scratch

Want to be your own boss but not sure if you want to start your own business or buy a business? It’s no secret that many new businesses fail within their first year. With that in mind, there can be many benefits to buying a business which is already established. The team at SOT Business Brokers Perth take a look at some of the benefits and pitfalls.

Buy a business or start a business?

Business continuation without interruption

Buying a business saves time and stress by having a base to build from. Think about the investment needed (time and money!) to find the right premises, staff, equipment, suppliers and more. An established brand with all processes and procedures already in place is a great platform for a new owner to step in an continue the business ‘as is’ or use as a base to launch efficiency improvements.

Immediate revenue stream

An existing business has established customer networks in place – it has already tested the market and has a proven model. When starting a business from scratch there can be a significant period of losses until a strategy is refined to best acquire customers / generate sales. Some existing businesses have built up trust and loyalty with customers over many years and being able to leverage the goodwill of existing networks is a huge benefit of buying a business.

Less risk

A financial history can give insight into the future performance of the business, although it is not guaranteed. A business broker will be able to walk you through detailed financials to understand the wider picture. As it is considered less risky to buy a business with a long trading history, it can also be easier to obtain lending to buy a business as there is proof of earnings rather than projections.

Learnings and insight

When you buy a business you buy knowledge. Some businesses for sale at SOT Business Brokers Perth are only available to purchase because the owner is ready to retire after years of success. These owners have decades of industry experience and have refined proven business models. You can not only benefit from their knowledge on what works, but very importantly, what doesn’t. Mistakes can be expensive, learn from someone elses!

Value for money

The purchase price of a business for sale can often be cheaper than to set up from scratch. It is a good idea to forecast an accurate budget on set up costs – including fit outs, equipment, branding, design etc and compare accordingly.

Other considerations

Some disadvantages to buying a business is that it might not be exactly what you want – from decor to product offerings and more. Keep in mind you may also be inheriting any existing problems within the business. Starting from scratch allows you to put your stamp on a business and implement your exact vision.

It is important to understand the role of the owner/seller, particularly when you look at a small business for sale. Are they key to the success of the business? What will happen when they leave? It’s important to have adequate handover – your business broker can help negotiate a time period suitable for both parties. Keep in mind that people often do not like change – what can you do to minimise the risk of existing staff and customers leaving with new ownership?

To learn more about buying a business, get in touch with SOT Business Brokers Perth today.

What our clients say

Claire B ⭐⭐⭐⭐⭐

Business Seller - "We really appreciate the work you...

"Thanks Alex for your help with selling our business. We really appreciate the work you put in."

Alessandro S ⭐⭐⭐⭐⭐

Business Buyer - "Helping and supporting us every step...

"I want to give a big thank you to Alex from SOT Corporate for helping me achieve our dream of owning a business. After many cold calls to different brokers in Perth , We finally found Alex. He took the time to understand my goals and gave...

"I want to give a big thank you to Alex from SOT Corporate for helping me achieve our dream of owning a business. After...

Paul C ⭐⭐⭐⭐⭐

Business Seller - "We achieved a rate 4x..."

"We approached a number of brokers whose only concern was how much I was willing to dump my business for. SOT approached us professionally and ran through what we could expect in terms of selling our business. We achieved a rate 4x what other...

"We approached a number of brokers whose only concern was how much I was willing to dump my business for. SOT approached...

Anthony M ⭐⭐⭐⭐⭐

Business Seller - "Consistently a quick responsive...

"Alex @ SOT our business broker has been consistently a quick responsive communicator, able to properly listen and understand all.We are grateful for his positive service throughout and the completion of the sale.Thank you Alex we would recommend...

"Alex @ SOT our business broker has been consistently a quick responsive communicator, able to properly listen and understand...

Tonia G ⭐⭐⭐⭐⭐

Business Seller - "An honest business broker..."

"Caleb and the team at SOT took on the challenge of attempting to sell our business with a very limited timeframe to achieve a sale when other brokers were uninterested in “giving it a go”. Despite the reduced chances of making a...

"Caleb and the team at SOT took on the challenge of attempting to sell our business with a very limited timeframe to achieve...

Barjesh K ⭐⭐⭐⭐⭐

Business Seller - "Very easy and clear to deal wit...

"Very easy and clear to deal with Mark. Best experience for sure, I will surely contact him for any sale or purchase of any business in future."

"Very easy and clear to deal with Mark. Best experience for sure, I will surely contact him for any sale or purchase of any...

Veli K ⭐⭐⭐⭐⭐

Business Seller - "Great from start to finish..."

"Alex was great from start to finish with our sale of business! His communication was consistent, prompt and very helpful even when dealing with time wasters. We will definitely recommend him."

"Alex was great from start to finish with our sale of business! His communication was consistent, prompt and very helpful...

JP de Gaye ⭐⭐⭐⭐⭐

JP de Gaye Electrical - "I could not have been happier...

"Hi Alex, I just wanted to take a moment to sincerely thank you for the work you completed on Veronica and my behalf with the selling of our Electrical business. As you were aware, my interests in selling my business was primarily...

"Hi Alex, I just wanted to take a moment to sincerely thank you for the work you completed on Veronica and my...

Sven Bartelt ⭐⭐⭐⭐⭐

Tiisch Cafè Bistro - "...their dedication to our growth...

"We developed a great partnership with SOT, and their dedication to our growth is evident in all aspects of our business. We appreciate their attention to detail and creative approach to bringing our new business model to life."

"We developed a great partnership with SOT, and their dedication to our growth is evident in all aspects of our business....

Kristy S ⭐⭐⭐⭐⭐

Café in Subiaco - "Excellent communication and sup...

"I recently bought a café in Subiaco via SOT Business Brokers and I was very happy with the overall service. Excellent communication and support – it’s a big decision to buy and I felt confident and informed the whole way...

"I recently bought a café in Subiaco via SOT Business Brokers and I was very happy with the overall service. Excellent...