This article are provided for information purposes only, and are not intended as legal advice.


Comparison of buying a business vs developing your own business

March 31st, 2010

Some people get very frustrated that they cannot find a business to buy, they believe that the price is too high and they think that they can do it on their own for a lot less.  Is that true?  It depends on the individual.  Some people have the right background and can be very successful at a new venture, others will not be so lucky.  Which one are you?

 

There are many multi level marketing companies currently selling products.  They always tell you of a few who make large amounts of money but how many of those success stories have you met a successful multi level marketer?.  I have seen many people in multi level marketing and never seen anyone succeed until recently.  A person with a retail background in a large organization started in a multilevel marketing concept.  Since he had thousands of people working for him, he knew how to deal with people.  Within a year he was making a significant amount of money and had over 500 people in his network below him.  He knew how to motivate them and what was needed to make his organization work.  This was a case of a person with a unique background applying his knowledge to a new business and starting from scratch.  Within 2 years, he will be making a reasonable living, within three years, at the rate that he is growing, he will be very successful.  Is this the norm, I do not believe so.  Many people start a venture and then realize it is not for them.  They do not have a lot invested in the venture so it is easy for them to back out and do something else.

 

A person called me recently and said that building a business to generate the first $1 million of sales is extremely difficult in the particular industry he was looking at – the food business.  He believed that once you succeeded in buying a business with one million of revenue it was easy to take it to $5 to $10 million.  The growth in his opinion from $1 to $10 million was much easier than the growth from $0 to $1 million.

 

Once you get to critical mass, the business will start to grow by itself and by referrals.  Getting to critical mass can take a long time.  The question is how long do you have to get there?  Do you have the patience, the cash flow to achieve that or are you impatient and willing to pay for someone else to build the business and achieve critical mass? 

 

Let’s look at another analogy, you want to buy a house in an established area.  You could buy a small run down house and fix it up or you could buy the brand new house beside the little house on the street.  Everything is done and there is no work.  Which one do you want to buy?  This is the identical concept to buying an existing business vs starting up a business yourself.  One there is very little to do and the other requires a lot of work to make your house look like the new one beside you.  Choosing an existing business vs starting a home based business is an individual choice.  There is no right or wrong answer.  It depends on the individual.


Filed under: Buy a business — Gary Landa @ 4:49 pm


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