| Frequently, people ask me should they start a business | | | | * An existing business has a proven track record. |
| from scratch or should they buy an existing business. I | | | | * An existing business has customers. |
| have owned four businesses over my career. I started | | | | * An existing business already has employees. |
| my first business in my twenties and was able to | | | | * An existing business has relationships with vendors. |
| grow it to eight million in revenue with over 50 | | | | * When you buy a business you acquire the hard |
| employees. My partner and I were the original | | | | assets which include furniture, fixtures, and equipment. |
| franchisees for Garagetek in the greater Chicago area | | | | Because they are part of the purchase price they are |
| which was almost the equivalent of a start up. We | | | | usually being acquired at a substantial discount over |
| also purchased a dormant direct mail franchise in New | | | | buying new. |
| York City, built it up and sold it. For the past six years I | | | | * In most transactions the seller will provide training |
| have been working as a business broker at AJR | | | | during a negotiated transition period so you're not |
| Business Advisors which I also founded. | | | | starting from square one. |
| As a business broker I make my living selling existing | | | | Some experts will advise you to buy into a franchise if |
| businesses with positive cash flows. I do not get | | | | you want to be your own boss. This too is a way of |
| involved in start ups or sell new business offerings. | | | | minimizing risk because the failure rate of franchisees |
| Although some of my businesses that I started from | | | | is usually lower than independent start ups. I would |
| scratch were very successful I have very strong | | | | agree with this, but I would take it one step further. Buy |
| feelings on the subject. | | | | a franchise "resale" instead because you will have all |
| Though I will be accused of being biased, I usually | | | | of the advantages previously outlined and the ongoing |
| recommend that people buy a business rather than | | | | training and support of the franchisor. |
| start one from scratch. The only time I recommend | | | | Please note that buying a business is certainly not a |
| starting a new business is if you have a very unique | | | | walk in the park. One must perform careful due |
| idea for a business which doesn't exist. I also will | | | | diligence to make sure everything that is being |
| advise you that you need to be well capitalized | | | | advertised is accurate. Financial records have to be |
| because many great new businesses have failed due | | | | examined and verified. One must make sure that they |
| to inadequate finances. There are some other rare | | | | look at all internal and external factors such as |
| occasions where I would give someone the green light | | | | employees, competition, industry changes, etc. I always |
| on a start up. | | | | advise business buyers not to purchase a business |
| The main reason I recommend purchasing an existing | | | | unless they feel they can improve upon it. Very few |
| business is to minimize the risk one takes. When | | | | businesses can stay on cruise control. If you are not |
| someone wants to be in business for themselves they | | | | growing the business it will most likely decline. |
| are taking a sizable risk. It is well known that so many | | | | It is all about risk and minimizing that risk. The goal of a |
| small businesses fail within the first five years. By | | | | business owner is to grow and prosper. Unless you |
| purchasing an existing business you are reducing the | | | | have an idea and capital for the next Amazon or |
| risks you are taking with your capital for the following | | | | Google, buying a business will give you a better |
| reasons: | | | | advantage over most that start from scratch. |