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Thoughts on Buying an Existing Business or Starting a New One
Owning and running your own San Diego business can be a dream come true. Fortunately, there are many ways to accomplish this goal. Two of the most common methods are starting your own brand new business, or buying an existing one. This article discusses some of the advantages and disadvantages of each. In either case, you will need to build a good business team including a skilled San Diego corporate attorney who can provide advice and guidance.
San Diego Corporate Law: Thoughts on Buying an Existing Business
There are many advantages of buying an existing business, particularly if you have never run a business before. Among those are:
- Existing customers and market niche
- Established viable pricing and marketing strategies
- Sales and business history — providing a level of comfort that the business will continue and succeed
- Financing is easier
- Established methods and procedures
- The “pieces” are already in place — such as the commercial lease, employees, vendors, etc.
- Current owner might provide training and other assistance as part of the sale/purchase
- And more
On the downside, the upfront costs are often substantially higher. While financing may allow the new owner to buy the business, that debt must now be serviced via the business income which might have a severe impact on cash flow and profitability. Furthermore, the business may have other debts, obligations, and liabilities that are problematic or unforeseen (which is why contracts and leases must be carefully reviewed and considered prior to purchase and many legal protections must be built into the sales contract).
San Diego Corporate Law: Thoughts on Starting Your Own Business
With respect to starting your own business, there are two typical methods – start small with limited seed money and build the business, or find an “angel” investor to provide significant capitalization for an immediate full-scale launch. The choice between these two depends a lot on the business to be started and your level of experience. Certain types of businesses lend themselves to attracting investors. Track record matters, too. An experienced entrepreneur who has been “in the business” for years can likely attract significant investments based on past success. By contrast, if this is your first business, it may be difficult to attract investors or major financing. Thus, a good option for new business owners may be to start small with a minimal self-funded capitalization and build the business by continually reinvesting the profits. This method has the advantage of avoiding excessive debt financing which, as noted, can crimp cash-flow.
Either way, the main advantage of starting your own business is that you are your own boss. You are fully in charge of the methods and processes used to make your business succeed. The “culture” of your business is your “culture.” You decide what gets done and how. You are not saddled with the processes and methods of someone else; you are not stuck with employees hired by someone else.
Call San Diego Corporate Law Today
If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard has been named a “Rising Star” for four years running by SuperLawyers.com. Mr. Leonard had the experience to help if you want to start a new business or if you want to buy an existing one. Please contact Mr. Leonard by calling (858) 483-9200 or via email.
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