Loading...
Answers
MenuIs it advisable to support an existing business rather than starting a new business?
I want to support an existing business by providing services in the area where they lack so that I can get a business for myself.
Answers
What you're talking about is starting a business with the first customer already identified.
You could even make the sale and sign a contract before you start.
This is a great way to reduce the risk in doing something new.
For added advantage, see what you might do to recycle the systems and efforts created for this business to the benefit of other clients.
Then you get something that can really grow.
If you'd like to brainstorm, set up a call.
Dave
Supporting an existing business is a great way to test the market demand for your services. If you contract with an existing company as an independent contractor (rather than diving in and buying part of their business), you maintain your autonomy, test the market, and keep yourself open to deciding in the future if you want to invest in the existing company or truly branch out on your own.
The answer which I will give is by my personal experience. No it is not advisable to support and existing business because there are many difficulties in starting .
Here are ten reasons why buying an existing business may be better than starting one:
1. Easier to secure finance
Most lenders are more inclined to lend money for the purchase of an established business rather than supporting an unknown start-up.
From their point of view, there is less risk involved in financing a business that has already proven it is able to generate an income.
2. Income from day one
Most start-ups go through an initial phase when they do not generate an income – for some, this can be three years or more.
During this period, it may be necessary to shell out money for the premises itself, equipment and it's installation, initial stock and materials, fixtures and fittings, legal and professional fees, a license, uniforms...the list goes on.
Without finance in place or an alternative income, this stage can be tricky for new business owners and it is easy to become demotivated.
3. Established brand
With an existing business you are buying into a recognisable brand with a track record, complete with all the trademarks, copyright and websites associated with it.
This gives customers, suppliers, lenders and other contacts a confidence in your business that they may not have when interacting with an unknown start-up.
4. Instant customer access
An existing business also has customers at the ready.
You can use various strategies and marketing to build on that customer base, but you don’t have the task of building it from scratch.
5. Established network of contacts
A large chunk of the time and energy involved in starting a business goes towards establishing a network of contacts.
Good supplier and marketing contacts are a valuable asset to any business and if your new enterprise has some on their books, you will hit the ground running.
In addition, like money lenders, suppliers and marketing companies are more likely to offer favourable terms to a business that has been around for a while.
6. Focus on growing the business
With a start-up, an entrepreneur has to channel all their energy into getting the business off the ground and this can be time-consuming and exhausting.
In contrast, taking over an established business means you are free to focus on the particular parts of the business that most need attention, aiding the growth of the enterprise as a whole.
7. Income to put back into the business
With a start-up, lack of finance to do what you really want with the business can be frustrating. Cash is eaten up in buying the resources needed to get things up and running, and dreams are left by the wayside.
With a steady income from an established business, you have more freedom in how you choose to re-invest this money.
8. Trained employees in place
Just as it takes time to build up a network of suppliers and other contacts, it also takes time to build up and train a team of employees. These people are already in place in an existing business.
This can make it easier to implement strategies for growth and development. It also means there is a trained team that can keep things running if you want to take time off.
9. Less risk
There is obviously less financial risk for lenders involved in buying a new business and it is also a safer option for the potential business owner.
Providing the business is doing reasonably well, it should continue to do so. In contrast, starting a new business is a jump into the unknown as far as financial security is concerned.
10. Less work
Starting up a new business can often become all-consuming. With so much to do, it is easy to allow the business to completely take over your life.
Those who don’t have huge amounts of passion and energy for the business can find that they begin to resent this.
Taking over an established business means that business practices have been streamlined and with existing employees who know the ropes, it won't be necessary to work around the clock.
Further queries you can consult me
You can start from scratch if you want to but starting from scratch presents some distinct disadvantages, including the difficulty of building a customer base, marketing the new business, hiring employees and establishing cash flow all without a track record or reputation to go on. When you buy a business, you take over an operation that is already generating cash flow and profits. You have an established customer base and reputation as well as employees who are familiar with all aspects of the business. On the downside, buying a business is often more costly than starting from scratch. However, it is often easier to get financing to buy an existing business than to start a new one. Bankers and investors generally feel more comfortable dealing with a business that already has a proven track record.
If you are not careful, you could get stuck with obsolete inventory, uncooperative employees, or outdated distribution methods. Buying the perfect business starts with choosing the right type of business for you. Think long and hard about the types of businesses you are interested in and which are the best matches with your skills and experience. Next, pinpoint the geographical area where you want to own a business.
Assess the labour pool and costs of doing business in that area, including wages and taxes, to make sure they are acceptable to you. Once you have chosen a region and an industry to focus on, investigate every business in the area that meets your requirements. Start by looking in the local newspaper’s classified ad section under "Business Opportunities” or "Businesses for Sale. And just because a business is not listed does not mean it is not for sale.
Put your networking abilities and business contacts to use, and you are likely to hear of other businesses that might be good prospects. You also need to assess the company’s reputation and the strength of its business relationships. Talk to existing customers, suppliers, and vendors about their relationships with the business. Contact the Better Business Bureau, industry associations, and licensing and credit-reporting agencies to make sure there are no complaints against the business.
While you and your accountant review key financial ratios and performance figures, you and your attorney should investigate the business’s legal status. Legal business liabilities take many forms and may be hidden so deeply that even the seller honestly does not know they exist.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
Related Questions
-
What are the best practices when it comes to wring business plans/proposals?
Hi! I work with entrepreneurs who are exploring opportunities and launching and I lecture in Entrepreneurship on the side. The answer to your question is it depends on the purpose of your business plan and who the audience is. If it's for yourself to help you plan the business, then a good place to start is a business model canvas which quickly captures your ideas and shows you areas you need to focus on. If you are planning on going to a bank for funding, you will need the traditional 20 - 40 page business plan. Some investors will want similar, some won't. You would produce different documents to get key partners or suppliers on board. If the planning and opportunity evaluation process is new to you, you will save a lot of time and money by getting someone on board who can guide you through this process. I'm happy to jump on a call with you to help you with this.SJ
-
What is essential for the skeleton of a business plan?
1. Lucid understanding of the objective behind business plan development 2. Customizing the content plan (skeleton) per objective 3. Adopting planning the business approach than writing a business plan 4. Knowing "How-To" and "What-If" Hope above to be of some help. Looking for anything specific? Feel free to reach out.SB
-
What is the best way of coming up with business name ideas?
A good name is unique, and stands out but should ideally create a positive association with it, especially your target demographic. When it comes to naming new products, companies will spend sometimes months and go through thousands of options before arriving on the one that they'll ultimately go with. Don't rush this process because its ultimately much more costly to have to go back or change, or ultimately fail because the name did not resonate enough with your target demographic. The name is not everything but it's a huge part. Go to techcrunch or cruncbase and look at any number of new start ups which are probably all great ideas or products but because they have either a dumb name or a not so unique name, they can fail. My personal pet peeve is the stilted and formulaic neologism of adding "ly" at the end of any noun or verb---perfectly hilariously noted throughout HBO's Silicon Valley. At this point, we are all more clever than this. Anyway, when you have only seconds to make an impression on a consumer, the last thing you want is cognitive dissonance caused by the name. Cognitive dissonance occurs when the signifier is not what is signified and vice versa; you're looking at a bicycle but someone insists it's a fish. And you're like, wtf. This happens when you're looking at a great product but then it unexpectedly has a weird or dumb name, a range of slight neorological impressions then occur, effecting the emotional relationship between consumer and product: confusion, annoyance, distrust, etc. All of these slight negative responses are not what you want associated with your product when you only have seconds to make an impression. That's why a good name matters. Now to your name: Dude Undies. Scrap this immediately. First of all, when it comes to men's underwear (I'm assuming this is your product), this is dangerous minefield territory because whether you like it or not, you're automatically dealing with issues of male insecurities involving self worth, virility, potency, etc Some light word association exercises (maybe among your friends) might be helpful in yielding an alternative to "undies" which i associate with: children, bedtime, potty training, etc.Absolutely not what men want to be wearing. You can see why this word next to "Dude" is cognitive dissonance in and of itself, never mind your product. I suggest you go back to the drawing board on this. Think about what makes your product different from your competitors', what value are you bringing to the market? Play with these ideas make a list of at least 50 words (thesaurus.com is very helpful) find a word or words that at least create that same impression. From my own observations, I've found that men love products with as few syllables as possible. If this is too daunting for you, enlist the help of a good copy writer with experience in product naming (I know a few if you need one), they should be able to give you a list of ad campaigns that they worked on. Paying them $100 for a good name is worth it in the long run. I hope this helps, best of luck to you!VG
-
How to decide stakes in a partnership?
The best way to test a person's talent is to put them to work in the reality of your business. If these folks are all onboard for being partners, promise to give them a cut of all deals they bring in. Structure the plan so that the contract lasts three months. Then, let them prove themselves and show (not just say) they really mean it. Make no equity promises until you can validate their claims. What if someone balks at the offer? I'd imagine these folks will have main jobs during the testing phase. If they scoff or refuse, then you've won immediately. If they aren't willing to hustle a bit extra for a few months how in the world could they do this for many years ahead within a successful partnership? Why three months? People can fake their behavior for quite a bit of time. At two months people can't help but being themselves. You'll get a taste for how they work, they're ability to close, and their personality. Personality is the biggest factor, as they may do a great job bringing in business, but be simply unbearable to work alongside. A note of caution around the Head of Marketing SME: this person sounds like a problem. Are they acting immorally towards their current employer? Check, stealing business. Are they sure they can do it on their own, but for some odd reason never have? Check. Are they requesting for more stake than they deserve? Check. These alone are reasons to run. Immoral, unproven, and greedy at the start. To me, you sound like you need to hire a commission based sales person. Give them a stake of each deal. Don't give up equity for something like this. This company is your baby and equity is a last resort.JF
-
How do you come up with a clear action plan/ roadmap/ checklist to get you from idea to launching a business?
To start with, create a "No-To-List" of non-action items. It will help you keep your focus intact on the actual and planned goals. It will also help the team's focus to move in unison. Talking about "To-Do" list of laundry items, start with assessing your internal capability, external requirement, and map the two to find the loosened nuts and bolts. Once you finish up with above exercise, create a list of action plan items that could help you move from possessing idea to establishing business. However, do ensure to plan your business model in the beginning to prevent from doing recurring redundant task. Let me know if you've tried creating any such checklist. You can DM me the same or we can hop on a quick call to discuss the fine prints.SB
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.