Exisiting Business or New Startup

The question I left you with last week was, “Why are so many people attracted to start a new business from zero”? It looks challenging and exciting, and many times, depending on the nature of the business, it is. But, consider all of your options. Look also at buying an existing business.

At my Rotary Club lunch yesterday, one of our members was making a presentation on some of the common mistakes business owners make. One of his points was “not enough working capital”.

When you start a business, whether it is a franchise or not, it takes a lot of cash to stay afloat until the business grows to where it can support itself. Last week I mentioned some of the expenses you incur before you have your first customer. Some are labor cost, buildout, equipment purchases, rent, advertising, etc. If these cost go on too long to the point you are strapped for cash, it can lead to an eventual business failure and the loss of your cash investment. I have met a fair number of business owners that are in this situation.

If you are thinking about going into business for yourself, get some good advice from your accountant or someone who has been through what you are planning to do. Consider the cash you are going to need before the business has a positive cash flow. If it looks risky, then you can change your plans from a new startup and start looking for an existing business to purchase.