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Buy An Existing Business or Start From Scratch? Which To Choose?
Buy An Existing Business or Start from Scratch? December 21, 2018 by Michael Shea PA So you want to own a business. The freedom, autonomy, and rewards are attractive. So where do you start? You can start a side hustle , buy a franchise , or buy an existing business. With so many options available to you how do you know which to choose and what are the pros and cons? As a broker, I have seen each of these options play out both positively and negatively. The side hustle allows you to hedge risk and make some money “on the side” but the time it takes to scale to actual “business” status is long. Franchises bring proven processes, resources, and often brand power. It requires more capital and you need to be comfortable with the restrictions and ongoing costs associated with being in “partnership” with a master franchisor. Finally, the one I think represents the best opportunity on many levels is the purchase of an existing business...
Rules of Thumb are for the Birds
Rules of Thumb are for the birds October 11, 2015 by Michael Shea PA (Edit) In the world of small business sales and mergers and acquisitions every buyer thinks every business is overpriced and every seller thinks its worth more than what you tell them. Over the years “industry experts” of which I am apparently one, bandy about “rules of thumb”. In other words….business X sells at 2 x cash flow or 70% of sales etc etc etc. I recently had a broker call me up and tell me that a business was overpriced (not her job) and that the proper valuation method was a $ value per customer. Oddly enough a month prior she had a different position entirely (#notethesarcasm). Valuation is an art and there is data to support proper pricing. But in simplest terms there is not one method that is correct; however sellers need to be particularly cognizant of market dynamics like supply and demand and inventory levels. Yes even in small business sale and mergers when inventory...
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