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Comparing Starting and Buying a Business: Insights from Mr. Bernstein

In this insightful piece by Mr. Bernstein, we explore the essential considerations between starting a new business and purchasing an existing one. The article highlights the challenges family businesses face, with only 33% surviving to their second generation, and emphasizes the importance of trust and clear responsibilities. Additionally, Bernstein discusses the franchise model, detailing how franchisees can benefit from established practices while managing startup risks. Finally, he outlines the benefits of buying an existing business, such as goodwill and trained employees, offering a comprehensive view for aspiring entrepreneurs.

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Comparing Starting and Buying a Business: Insights from Mr. Bernstein

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  1. Entrepreneurship Mr. Bernstein Starting Versus Buying a Business, pp 57-62 March 5, 2014

  2. EntrepreneurshipMr. Bernstein Entering the Family Business • Only 33% survive to a second generation • Trust and togetherness (“chemistry”) can be a great asset • Clear lines of responsibility are needed • Consider potential areas of conflict

  3. EntrepreneurshipMr. Bernstein Buying a Franchise • Venn Diagram: • Franchisee • Franchisor • The Franchisor controls business practices, provides planning and management expertise, training, and product and name recognition • The Franchisee avoids most startup costs and uncertainties • The Franchisee pays an upfront fee and ongoing royalties, or percent of revenue

  4. EntrepreneurshipMr. Bernstein Buying an Existing Business • Goodwill – loyalty of existing customer base • Owner participation in transition period • Inventory • Plant and Equipment • Credit Arrangements • Trained Employees • Innovation usually comes from within an industry • Business Brokers facilitate buying and selling of small businesses

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