When Should I Start or Buy a Business?

Be in the Know on When You Buy a Business

Are you wondering how, when or where to buy a business?  We have curated these questions to help you find the perfect answer for your situation.

Need expert help? Find a broker here to help you determine which type of venture will suit your needs and profile.

Should I start or buy a business?

It depends on whether you enjoy the challenge of starting from scratch or prefer having a base to work from. If you want to make money right off the bat, then starting your own venture is not the right choice. In this instance, you’ll need capital for at least six to twelve months, must have enough money upfront to pay for licences, lease deposit, products, POS, website, marketing and more. It can quickly add up and before you know it, you’re in the red. For this option to work, you must have sufficient funds to carry you through the first year as you still have to establish a market and build a reputation while you grow the revenue generation capacity of the venture.

Purchasing an existing venture with an established client base gives you the opportunity to trade from the first week or month. You can recoup the initial investment faster and have financial records in support of your application for finance. The venture can also have substantial assets, which can be used as security for finance. A system is in place, giving you operating procedures rather than you having to work on a trial-and-error principle. It’s the safer option, helping to minimise the risk of not having income for a long period.

What’s the best route to buy a business? Franchise or independent?

Both options have benefits. A franchise offers a well-established brand name, national or regional advertising already done for you, policies and procedures in place, a proven model, support, training options, and credibility with the public.

The independent venture gives you more control over marketing, promotions, management, market expansion, new concepts or products, and personalisation. With the franchise option, you have less control over the mentioned aspects, but you have a brand and reputation that count in your favour.

The question here is whether or not you prefer working within a more structured, but supportive environment or do you enjoy the autonomy of a boutique or independent model? If you’ve never owned a business before and have worked in the corporate environment for some time, you’ll appreciate the franchise model. If you’re an independent contractor, freelancer or come from an entrepreneurial background, then the independent route might be the more attractive option.

Can I get finance?

Yes. Several finance options are available. In most instances, lenders and investors will want to know what you bring to the table. This includes how much capital you have available. It’s hardly possible to succeed if you don’t have a cent to put in. If you want to buy a business, start saving now. The more cash available for operating costs and to pay part of the purchase price, the better. Finance options in South Africa include, but are not limited to:

• Banks – personal loan, overdraft, second mortgage against a property, or a business loan.
• Short-term loans – payable over a period from six months to five years (higher interest rates).
• Finance specific to buy a business (use the Internet to locate viable lenders or speak to a broker).
• Crowdfunding (raise money via social media and crowdfunding platforms).
• Investors – including angel funding.

Ready to take the next step?

Browse our extensive selection of profitable businesses for sale and register as a buyer for more information on the opportunity that catches your attention.