One of the questions we’re asked frequently by young, energetic entrepreneurs is why should I buy a business when I can just take a new idea or remake an existing idea a start-up company? The answer is track record and potential. A business has a history, just like all people. Some of the experiences in that history are positive and some not. By examination of the financial records of a business, you can determine how the business has performed over its existence and more importantly, over the past three to five years. You can sales cycles and profit and loss swings, but more importantly, you should see steady and consistent growth, not decline. Businesses go through four major cycles, start-up, rapid growth, maturity, and finally renewal or decline. You certainly do not want to purchase a business that is late in the maturity or decline portion of the cycle. So, with that said, a few positive reasons for purchasing a business include, but are not limited to:

• Consistent profitability growth
• Current and steady customer base 
• Known product or service
• Brand loyalty 
• Trained and dedicated employees
• Operations and programs already in place 
• Business relationships with banks, suppliers, etc. 

Start-ups, on the other hand, have no history and therefore the owner must establish themselves personally and develop the positive characteristics as they grow. This is certainly a less expensive alternative to start, but may prove to be a much more difficult one and ultimately more expensive in the long run. The number of successful startups within 5 years of launch are staggeringly low, possibly as low as ten percent or even less. Here are the 2021 statistics from Fortunly.com: (https://fortunly.com/statistics/small-business-failure-statistics/)

• 78.5% of small businesses survive their first year 
• Business owners under 30 are more likely to fail 
• The most common reason small businesses fail is that the market simply doesn’t need their product or service 
• 29% of businesses fail because they run out of cash 

Armed, with just this small bit of information and a little research, a potential business owner should determine the best avenue for the business they ultimately want to own. Buy an existing business or spin up a new entity? With these alternatives, spend ample time doing the research before you make your final decision. Develop a business plan, operations plan, and think about consulting a business coach to get you off on the right foot in your new venture. As a small business owners and real estate brokers ourselves, we can assure you that you will not be bored, no matter which alternative you take. Owning and operating a business is full of challenges, risks and rewards. The goal is to ensure the rewards outweigh the risks when the final accounting is complete. And with that, I wish you great success in all your business ventures.