Owning your own business is often associated with “The American Dream.” The possibilities are endless, our economy is suited for small business, and as a business owner you have the freedom in your work that many only ever get to dream of. In this blog, though, the discussion is geared towards purchasing a business rather than simply starting a business. For more information on starting a business versus purchasing a business, you can read the blog we wrote here . However, now we are going to explore whether or not purchasing a business is right for you. It can be a very fruitful opportunity, but it’s not for everyone.
Pros of Purchasing a Business
When you think about why someone would purchase a business, there are a lot of reasons that naturally come to mind. Oftentimes someone is looking to buy a job that is stable and perhaps gives them a greater income than what they currently have. The labor market is ever-changing and entrepreneurship is often encouraged in society. Purchasing a business where you can work full-time and earn a good living is very attractive. Additionally, unlike a 9 to 5, your earning potential is unlimited. There is also the opportunity to purchase a business where you work part-time or not at all while still generating a strong cash flow.
Another perk of purchasing a business is that you get to be your own boss. One of the most common complaints we hear from buyers is that they are tired of corporate America. They no longer want to be a cog in someone else’s machine, doing work that they disagree with or do not want to do. People want freedom. When you are your own boss, you get that freedom. You decide how the business operates, the hours, who the employees are, what your schedule is, and more.
For many buyers, the perks aren’t even work-related. Some people like the lifestyle that comes from owning a golf course or a gym or a bar.
Cons of Purchasing a Business
Now, there are certainly disadvantages to buying a business. Before you even start running the business, you will have likely made a huge financial investment. Of course, it’s generally less risky than starting your own business, but there is going to be inherent risk with buying a business. Especially because there is such a large investment up-front. There is a lot on the line and there can be a lot of pressure. The hope is that you are buying a business that is already cash flowing. Still, it’s vitally important that the business you purchase is a good fit for you to help mitigate some risk. To read more about determining what sort of business is best for you, you can read our blog here .
Additionally, there are risks in purchasing a business from a seller that may not have your best interests in mind. Many sellers have one primary goal: sell their business for as much as they possibly can. In doing so, sometimes, numbers get exaggerated or sellers don’t tell a buyer about hidden liabilities. Sometimes a seller just may not know about any hidden liabilities. In the due diligence phase, it’s best to come in with help from a business broker and other experts to identify and address whatever problems may arise. It’s always preferable to uncover the problems before you make the purchase.
Now, being your boss can be great but it can also be a double-edged sword. You have all of the freedom to do whatever you want, but you also have all of the responsibility of ensuring the businesses’ success. The stakes for failure are probably far higher for you than they were at your former job. Even if they want to see the business succeed, it’s ultimately 100% on you and the team you put around you.
As your own boss, you can make your own schedule, but there may be times when the business demands you to work longer hours than you’re used to at hours you’re not used to working. Again, in times of trouble, you have to be the one to get the business back on track. And if there is any aspect of the business you have to learn, you need to learn it. If you make mistakes, they may cost you.
Done properly, buying a business can be the best financial and even personal decision of your life. However, purchasing a business has its share of risks and you can read about how to make sure you’re protected in a business transaction here . However, many who take the plunge into entrepreneurship are not suited to working a 9 to 5. For them and others who want the freedom that comes with the territory, the risks are worth it. Many want to test themselves and see what they can do when they aren’t being held back by their corporate working environment. Others prefer the structure of a corporate job and are comfortable with it. We’ve tried to lay out some of the pros and cons of purchasing a business for you to help you determine how you feel about it. There is no wrong answer.
If you are interested in purchasing or selling your business, the Apex team is always happy to provide our services. We work with buyers free of charge and utilize our in-house legal team to make sure you are protected in every transaction. We offer a free consultation either on a video call or in person to help you understand the buying process so you can determine if it’s right for you. Call today to get started!