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Starting vs. Buying a Business: Key Insights for Entrepreneurs

In the entrepreneurial landscape, potential business owners often face the pivotal choice between starting a new venture or buying an existing one. This guide explores critical factors involved in each option, including the survival rates of family businesses, the benefits of franchising, and the importance of goodwill when purchasing. With insights on trust and responsibility dynamics in family enterprises, the role of the franchisor, and aspects to consider when buying an existing business, entrepreneurs can better navigate their paths to success.

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Starting vs. Buying a Business: Key Insights for Entrepreneurs

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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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