The UK has always been an entrepreneurial country and this trend looks set to continue, with a recent report by Future Founders revealing that 51% of Brits aged 14 – 25 have thought about starting (or have already started) their own business.
Those going it alone seek all the benefits that come with running their own business including being their own boss, having more control over their own time and benefiting more from the success of the business.
When it comes to starting their own business, there are two main routes that entrepreneurs take which are starting from scratch and building from the ground up or purchasing a business and taking over its management.
There are benefits and drawbacks of each method and the best route will be unique to you. To help you make an informed decision, our blog post runs through the pros and cons of both approaches.
Why Start Your Own Business?
There are many reasons why entrepreneurs in the UK and around the world look to run their own business, some of the most common motives include:
- Financial ambitions – Running your own business means you benefit more financially if the business is successful. Some entrepreneurs pursue business ownership with the view to sell their business once it is successful.
- Flexibility – Many value the idea of the added flexibility that being their own boss gives whether that is being able to choose their own working hours or work from home when running their own business.
- Control – Business owners have complete control of how the business operates, enabling you to develop the business based on your vision.
- Passion – Starting your own business in a field you are passionate about can be extremely rewarding. A survey by Vistaprint revealed that small business owners are twice as likely to love their job and be passionate about their work vs. full-time employees.
Starting Your Own Business
Starting from scratch is the way many entrepreneurs envision their path to running their own business. Once established, the business owner may expand further through organic growth, acquisition or by creating a franchise model.
Whilst this process allows business owners to retain control and shape their company the way they envisioned, there are many challenges they will face along the way.
Advantages of Starting Your Own Business
- As the key stakeholder, you will benefit when the business makes a profit.
- There are less upfront costs to bear vs. buying into an existing business.
- Allows you to build up the business the way you envisioned.
- If the business succeeds, you have the opportunity to look at acquiring a business to enable rapid growth in the future.
- Gives you control over your working hours and allows you to be your own boss.
Disadvantages of Starting Your Own Business
- Whilst it differs from sector to sector, it is rare for a business to make a profit straight away and some never do.
- When a profit is made, reinvestment in the business is often necessary to ensure success can continue.
- Unlike traditional employment, if the business fails, you will be financially liable.
- Whilst many value the independence and control that comes with growing their own business, this self-reliance can stifle innovation.
- Whilst entrepreneurs may have rich knowledge of the industry, business growth and management require completely different skills.
- Starting your own business can be stressful and many small business owners experience fatigue when trying to compete against established competitors.
Buying a Business
Buying an existing business is a route to business ownership that may be overlooked by those thinking about running their own business for the first time.
This route to business ownership allows entrepreneurs to buy into a proven model but requires upfront investment and can force the new owner to make compromises on how the business is run.
Advantages of Buying a Business
- When buying a business, you are taking ownership of a proven business model with the necessary processes, staff, equipment, suppliers, and customers to increase your chances of continued success.
- The market for buying businesses is strong allowing entrepreneurs to select a business for sale in their chosen market that aligns with their values and ambition.
- Lenders will often favour those buying a business with a proven model over lending to fund their own business idea.
- Buying a business often requires less of a time commitment and entrepreneurs can be more flexible with their time through delegation.
- Established businesses should have the financial records necessary to allow for better business planning.
Disadvantages of Buying a Business
- Buying a business requires a large amount of upfront capital which may need to be borrowed from a lender. However, there are alternative forms of funding available such as vendor finance which offers more flexibility to entrepreneurs.
- Not every business for sale is successful, it is important to do your research and use a professional business broker to ensure the business you are interested in will be a good investment.
- There may be friction and creative differences between existing members of staff when they are under new management.
- Entrepreneurs may feel that buying a business is a less authentic route to business ownership.
Help & Support from Bristol Business Brokers
If you want to run and manage your own business, buying an established business is a predictable and proven method that offers many benefits over starting from scratch.
At Bristol Business Brokers, we can help you find a suitable business within your sector that matches your ambition and values.
For more information, give one of our team a call today on 0117 379 0117 or fill out a contact form and we will get back to you.