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American Home Business Network: Buy a Business or Start One?

Wednesday, July 1, 2009

Buy a Business or Start One?

By Steven Schlagel

Many experts agree that the safest way to get into business for yourself is to buy rather than start a business from scratch. Let's take another look at that and we'll see that it is both true and false.

A business start up does seem to have a higher failure rate. This is often because of poor planning and preparation by the owner. If you think out and plan for your new business you'll have reasonable chance for success.

You give yourself a better than average chance of success when you go through a proper planning process and surround yourself with capable advisors. You should do that whether you buy or start from scratch.

It's not always riskier to start up if you look at other possibilities like deciding to start small. A part-time endeavor while keeping your regular job is one way to start and grow a business with less risk. You'll keep from paying a large upfront price for an existing business and that is a more conservative approach.

Not many can pay cash for a business and are forced to take on debt to get started. Debt is always a bad idea. Let me say that again - debt is always a bad idea.

Debt puts you in the hole. It means that after covering all your operational costs you still have to make payments on that loan before paying yourself. The banker doesn't plan on being last. This greatly increases your risk and the likelihood that down markets puts you out of business.

Debt cuts your options down significantly and will make you a slave to your lender. You wanted to leave the world of the wage slave ... great idea ... but don't enter into the world of the debt slave. It's not any better, it's worse.

Sometimes, buying an existing business makes good sense. An established small business in a solid market, purchased at the right price, can be a great way to go. But don't buy potential alone. Many a seller will try to convince you about the future, what he hasn't done yet, but might. The business must have already proven itself. To see if the purchase is a reasonable deal for requires a review of its financial records.

Take a look at the last five years tax returns and talk with of the management of the business. You will likely be best served to have a business valuation done by a professional, a Certified Valuation Analyst (CVA).

Before incurring the cost of a valuation you or you and your accountant should review the financial information to see if there is even a chance that this business will work before hiring the valuation professional. Small businesses with a track record of five or more years have a lower rate of failure. Take into account the economic conditions though. A bad economy can change everything. Consider how the business will weather a difficult economic situation.

Some last thoughts on buying a business. To buy another owner's business and ideas puts you on the defensive, which isn't always a great thing. You will find that you acquired your seller's customers, employees, and culture. Why is that so bad?

It can be. You will have to unload the bad, unprofitable, or slow paying customers. You will have to trim out those employees with bad or low character, and the low performing ones. You also have to change the culture of the small business from the last owner's to your own. My own experience has shown that to take three plus years and it's never fun.

I've taken this journey many times and it often seems to be easier to start a business from scratch than buy. So take the time before you buy, look at how many undesirable customers and employees there are. What is that culture really like? Don't just look at the numbers. You're about to be the boss and will need to run this business. It's a big investment of time and money to change the culture, employees, and customer group. Be wise and make a good decision.

About the Author:


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Feature Article: Make the Leap to Home Based Business Success

Feature Article: Make the Leap to Home Based Business Success
Copyright © Stone Evans, The Home Biz Guy
http://www.PlugInProfitSite.com/main-21753

Before you can have a successful home based business, you must first possess 3 "intangibles." These are things that must come from WITHIN you.

 ===> Intangible 1 <===

First, you must have a strong WHY.

Why MUST you have a successful home business? What is driving you? What is it that you CAN'T have in your life anymore and/or what is it that you absolutely MUST HAVE now?

For me, I couldn't stand working 12+ hours a day anymore and missing the experience of my children growing up. I also absolutely HAD TO HAVE the freedom of being able to control my life and finances through a little box (laptop computer) that I could carry with me anywhere in the world and not be tied to anyone's time pressures or demands but my own. That was my carrot and my stick. I felt a great pain deep in my gut of missing out on my children's lives and the incredible freedom that succeeding in a home based business would provide for me. I found my why. You MUST find yours.

===> Intangible 2 <===

You must BELIEVE that it is possible.

If you don't believe that it's POSSIBLE for you to have a successful home based business or make your living from home, you won't. It's that simple.

For me, figuring out that it was possible was just a matter of realizing that many other people were ALREADY making great money working from home. If they could do it, I could too. It would just be a matter of figuring out what those people were doing and then adapting it to my situation.

There is no shortage of undeniable PROOF that people (millions of them) are making money working from home. Just get online and do some research and you'll find countless testimonials and stories of REAL PEOPLE making real money on the Internet. Or head to your local bookstore and you'll find the same documented evidence of this fact. Truth is, it's getting easier and easier to make money with your own home based business.

I've always said that "affiliate marketing" (a simple way to make money from home) is the job of the future. In the "old" days, you had to go to a potential employer, apply for the position and hope for the best. Now you can simply go to any company you want, fill out their affiliate application and start work immediately. Affiliates are the new working class. In fact, making money with affiliate programs or making your living on the Internet is WAY MORE than possible. It is pretty much (or will be soon enough) unavoidable now. Affiliate marketing is the "job" of the future that's already here TODAY.

===> Intangible 3 <===

You must be willing to MAKE THE LEAP.

Ready, FIRE, then aim... This is the operating philosophy you MUST adopt to succeed with a home based business.

That's backwards for most people who like to aim before they fire. The fact is that home based business success is a moving target... The only thing constant about it is change. You need to stop analyzing the game and simply jump into it. You can't learn from the outside... You have to be IN THE RING to truly understand it.

The lesson here is that you will never really be READY to start a home based business. You simply have to start one. It's like having children... You're never really ready, but when it happens you adapt and grow. This is what I call "Making the Leap."

The good news is that the cost of failure with having your own home based business is very small. In the "brick and mortar" world you need to evaluate things very carefully before you decide to open up a business. It's almost always necessary to invest thousands of dollars to get an offline business off the ground. However, on the Internet you can often start a successful business for less than $100. The Plug-In Profit Site is a great example of this: http://www.PlugInProfitSite.com/main-21753

You simply need to get IN THE GAME... Each moment that you stay "out there," you're wasting valuable time that you could be learning and skills necessary to build a successful home based business. In fact, if you're not in the game yet, you're ALREADY behind the times. Make the leap to creating a successful home based business today!

About the Author:

Stone Evans, The Home Biz Guy has helped thousands of people in over 200 countries around the world start and run a successful home business. Discover 3 easy steps to start your own home business and subscribe to The Home Biz Guy's FREE Home Business Secrets Mini-Course at: http://www.PlugInProfitSite.com/main-21753



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