The Four Key Advantages Of Buying A Business Rather Than Starting From Scratch

There are many advantages to buy an existing business. In this day and age, starting up a business from scratch is a lot trickier, due to an uncertain economy and also the presence of other competitors.

When it comes to buying a business, though, there are benefits. You have an established customer base, experienced employees, an established market position and operating systems that are all in place.

If you are worried about what the customers will think when the recognised leader has left, then don’t. There are many types of customers and clients who will still prove loyal even when there’s a new face at the helm. Providing that you handle the established customer/client base well, there is not a problem. You may find that customers buy on a cyclical basis, ranging from a month to a year or even a decade. If that’s the case, don’t throw away that 10-year-old customer list. Managing an existing customer/client base is certainly preferable to getting customers on board when starting a business from scratch – which can prove to be both expensive and time consuming.

You will also find that you have a valuable set of employees at your disposal. They are both experienced and skilled, and will often know the business inside out and backwards. However, with the prospect of new ownership, this can re-energise them and give them a new lease of life. Certainly, compare this to if you had to find new employees from scratch. Not only do you have to be sure that they are the right fit for the company, you also have to train them up and educate them about every single aspect of the business. Sure, one day, they will be well up to speed, but with a purchased business, the staff is already in place – meaning that they have the knowledge and skill to get on with the job – which in turn, means a greater level of productivity.

You also have an operating system in process. The benefit of this is that, depending on how long the business has been running for, you will have a tried and tested business system in place. It is difficult to judge what business system works and what system doesn’t. When you start a business from scratch, it will very much be a case of trial and error. You may find that you end up wasting time on trying to find the best system for you. With an established business, this system is already in place, and hopefully is one that provides the best results.

You will be entering a business that already has a market position. The best case scenario is that the business is widely respected and known, maybe in the local area or even all over the country. With that in mind, more people are going to want to buy from a business that is widely respected for top quality service and product. Even if the business only has a strong reputation locally, this is still a good starting point, since you can use this as a springboard for a broader profile. With a new business, you have to work hard to build up that level of respect, but with an established business, this is an easier process.

Providing that you have enough money at your disposal, buying a business is a shrewd investment. Even if you don’t, there are still ways around it, such as a loan made either from a bank or from the business owner which can be paid back over time. It is still has advantages over a franchise, because you can do whatever you want in a bought business, whereas in a franchise, you are still marching to someone else’s tune. Whatever your reasons and methods of buying a business, make the most of the advantages at your disposal and you will hopefully reap the rewards.

The 3 Essential Documents Needed to Start Any Business

Starting a business can be a risky undertaking. They can be full of missteps, starts and stops and disappointments. To ensure that you start off on the right footing, there are three documents that will create your ventures foundation. Without them, it will be hard to be successful. These three pieces will take some time to get right. Iterating on them will codify your idea. This creation and iteration process will make your venture much more likely to succeed.

Step 1: The Pitch

The first document is your pitch. This is usually done in some presentation tool like NeoOffice or Keynote or Powerpoint. It should be the first document you create since it outlines your venture.

The importance of the pitch is that it allows you craft a story for your business. It’s what Angels and Venture Capitalists will want to see when they meet you. A good pitch is not a wordy, 12 point font business plan in Power Point but a high level vision of what you want to do. Refining your pitch will strengthen your story. Refining your pitch delivery will make your idea come alive.

Step 2: The Financial Model

Once you have outlined your idea, you need to figure out if it will actually make money. I know, sounds shallow and all corporate but it’s the truth. There is no point in spending a ton of time on your business idea unless it feeds you.

The financial model is meant to cull through your assumptions about income and expenses. Getting these all down will help you refine your pitch and executive summary. Since this is an iterative process, don’t worry about getting everything perfect right away. Just get something down you can play with. If you are unsure about an expense, put it in anyway. It’s much better to over estimate a little than to undershoot. The same applies for income (or sales).

Step 3: The Executive Summary

The executive summary is critical to getting that first meeting with investors. It’s the first thing they will ask for (the pitch might be second). It needs to stand-a-lone as the best possible high level overview of what you do. Each word, each phrase and each number has to do useful work. It has to be clear, concise and easy to read. Think of it as your ventures infomercial.

Step 4: Iterate

Getting all three pieces right will take some iteration. These iterations will anneal all three into a cohesive set. The best way to iterate is to practice your pitch in front of your team and others you trust. Have them act as investors and critique your delivery and message. These sessions will show you where your idea needs more work. Any area where you have to give long explanations or stumble over words, needs to be refined. Stumbles during the warm-up will tend to get worst when nerves get the best of you when in front of investors. Practicing will make that a whole lot better.

What About A Business Plan?

Business plans are an important component of your venture but not the end all, be all. Solid business plans start with the three documents above. They lay the foundation for how your plan will be structured. It’s important to flush out the high level idea before you dive into the business plan details. In most cases, your original idea will morph into something different. Waiting for the morphing to stop will save you time and effort.

Some funding sources don’t even want to see a business plan (Ventures and Angels). What they will want is a verbal description of your venture along with specific plans (like technology road maps or market roll out). Just because you don’t do a formal plan does not mean you don’t have to do the work. Knowing your business inside and out will instill in the investor that you are the right person to make it successful. Skimping on that will never get you funded.

Small Business Score – Are You Doing it Right?

A small business can be a good source of income for many people. Since the business is able to pay its bills and still make a profit, then it will have a good credit standing. Unfortunately in the business world, there are times when business can be good and other times when there is no money coming in. You have to be ready for this kind of situation.

If you have been in business for a while, you should have at least mastered the money making months and those that are not. When you do this you will be able to survive through the bad months using the profits of the good ones. You have to be organized and know how your business inside out. If you have no structure in your business, you may be caught unaware and find yourself in a difficult situation. This could stem from debts, or a certain need to expand your business.

Whatever the case may be if you have no savings, you may be forced to borrow money. When you approach lending institutions there are specific requirements they look for before they can give you funds. Your credit score is a very important aspect that is assessed by these institutions. If you have gone through a rough patch recently and you need funding, fear not. There are ways to improve and build your small business score. Ensure that you pay your bills on time. It will be evident to the lenders that the business is operating as it should.

Another way for you to build your small business score is to keep good financial records with a solid accounting structure in place. This way you will be able to keep track of money coming in and that going out. You will also be in a position to project any financial problems before they arise. This can cushion you from future financial disaster. This will reflect on your business score and lenders will be more inclined to give you money.

Four Tips to Funding a Business Start-Up on a Shoestring

Are you unsure about whether or not to start your business because of lack of start-up funds? Many small and home business owners face this very issue in the beginning. Do not get discouraged — there are lots of ways you can fund your start-up business on a shoestring.

The first thing to remember is that there are endless numbers of success stories of shoestring businesses making it big.

One of my clients, back when I was running a web hosting business, started a baby sling company from her kitchen table. She simply purchased fabric and thread and used a sewing machine she already had to create a sling that was comfortable for her, and her baby. She really did not even plan to start a business.

But after getting rave reviews from friends and strangers at the grocery store, she started selling her slings online.

Today, she is a well-known sling maker whose products have been in big box stores and who sells thousands of dollars a day from her website.

Be encouraged and know that you can build a successful business from scratch, but you have to be focused and never willing to quit.

The second suggestion that many who have been in your shoes suggest, is not to quit your job until your business begins showing a profit. All too often, new business owners are enamored with the idea of owning and running a business and quit their day jobs, only to discover that funds run short fast. Then they are forced to take extreme measures, or look for another job.

Next, you have to truly know your business inside and out. How much money will it cost to run your business? You should complete a business plan, which will tell you if your business idea will be a feasible one or not. Research similar businesses and find out what kinds of profits and losses they are seeing.

Finally, if you find that you still need some financial backing but you do not want to borrow money from a financial institution, find a few investors. Present your business idea, along with your prepared business plan and research to trusted friends and colleagues and request their financial backing for your start-up business. Many times you will be able to obtain this kind of monetary help from those who believe in your business and want to see you succeed.