Starting a Business From Scratch is Insane
Unless You Have a Book of Business From Your Current Job and Can Take It With You.
Unless, you have a current book of business you and take with you when you quit your current job, I believe it is Complete and Utter Insanity.
Especially if you have a family to support.
- Steve Jobs lived at home with no living expenses and worked out of the garage.
- Mark Zuckerberg was a college kid living off mom and dads tuition payments.
- Michael Dell was a college kid living off mom and dads tuition also.
NONE ONE OF THEM had a family to support, nor did they have to worry about where the next meal was coming from.
Going it on your own and starting a business from scratch when you have mouths to feed is a recipe for disaster unless you have your “nut” covered with some sort of income coming in to support you.
In my opinion, the best thing anyone without an exiting book of business can do for themselves is to buy an existing business and take it to a higher level than the current owners have done.
It is easier than you think, and has a whole lot less risk involved. ESPECIALLY if you have rent to pay and mouths to feed.
Let me explain a little further in detail:
When you buy a business, you take over an operation that’s already generating cash flow and profits.
You have an already established customer base, supplier network, ongoing reputation, and (hopefully) knowledgeable employees.
You don’t have to reinvent the wheel
You don’t have set up new procedures,
You don’t have set up systems or policies.
Since all of the heavy lifting has already been done for you, all you need to do is put a key in the door and begin making money from day one.
Now there is a reason the business was put up for sale in the first place, and you will probably want to make changes along the way, but making changes to something already running is a whole lot easier than inventing them from scratch.
The downside of buying an existing business is it might cost you more in the beginning than starting from scratch. The key word here is “might.”
Because Buying an Existing Business Has a Lot More Upsides To It Than Starting a Business From Scratch:
1. Financing: It’s a whole lot easier to get financing to buy an existing business than it is to start one, and oftentimes, the seller will become the lender so you don’t have to go pleading to a banker pledging your soul, your spouse, and first born child as collateral.
2. Time: Buying an existing business also automatically gives you the years established “time” record needed in many cases to establish credit from creditors and might just give you a few valuable legal rights, such as patents or copyrights, which can prove very profitable.
3. Off-Balance Sheet Assets: Perhaps the biggest benefit of buying an existing business is what I call the “Off-Balance Sheet Asset List” (OBSAL) which, in my opinion is one of the most overlooked, undervalued, unrecognized and unknown assets of an exiting business that you must know about because it can be the goose that will begin laying golden eggs for you within days of buying an existing business.
As in life, there is no “Sure” thing except death and taxes, and to be perfectly clear, buying a business is no exception.
You might be wondering what OBSAL means, as you should be, but I’m not going to get into it in this article.
It is one of the “trade-secrets” I teach to my students and clients and I intend to keep it that way.
Regardless of what kind of business you are considering, there are 5 separate and distinct parts of every business that you need to know about and understand before even making an offer to buy a business.
If you don’t know these, and buy the business you are unknowingly setting yourself up for a potential disaster.
now about so you can make sure you identify the strength and weakness of each of them so you can identify and make the needed changes so you can make the business more profitable.
By doing this one little exercise, you will easily identify the chink on the sellers armor so you can negotiate a fair deal, pay a reasonable price, and once you own it, you can quickly make changes so you can make the business more profitable.
When done correctly, the profit increases happen almost overnight, turning a good deal into a great deal, making you look like the entrepreneur of the decade.
Afterward, you can either flip the business for a quick profit, or keep the business for cash flow, or grow it onto something great, or both. The choice is yours.
If you’d rather be starting a business from scratch, none of what I just mentioned is available to you and you will need to start from the beginning. You have nothing to fall back on, no systems or procedures in place, so you will need to build them, and you need to eat while doing it.
So you need to ask yourself … do you have the patience, time and funds to do so?