Starting a business from the ground up is one option for new entrepreneurs, but it’s not the only one. You can also buy an existing business or go into business part-time to test the waters. So how do you know which option is best for you? Here are three questions you should ask yourself to help you decide.
1. Why do you want to start a business?
- Do you have a concept you’ve always wanted to build a business around, a new invention, or an idea for a way to do something better? If so, launching your own business from scratch is the best way to see if your idea will fly.
- Do you just want to be your own boss but don’t feel strongly about any particular industry? If so, purchasing an existing business or buying a franchise or business opportunity can give you the leadership role and lifestyle you desire without all the grunt work involved in starting from scratch.
- Are you looking to test the waters of entrepreneurship and see if it’s right for you? If you’re not sure you want to commit to business ownership full-time, starting a part-time venture on the side is a smart move that gives you the best of both worlds.
2. What financial resources do you have?
- If you have the money to invest, you may be able to purchase an existing business or a franchise (costs vary depending on the industry, the location, and the opportunity). An existing business will have a specific asking price, so do your due diligence before buying. This way, you will also get a good idea how much additional capital is necessary to run the business. As for franchises, they come in all price ranges; the franchisor will tell you how much startup capital you need to buy it and get it off the ground.
- If you’re on a tight budget, starting your business part-time makes a lot of sense. This option allows you to keep your full-time job (and salary) while you explore entrepreneurship. You can put your profits back into the business to expand it until you’re ready to go full-time.
- If you’re somewhere in between these two extremes, starting your own business from scratch enables you to set your own budget and tailor your business to your available capital. For instance, you can take money-saving steps like working from home or purchasing used equipment. The risk is it’s easy to go over budget and spend more money than you planned. Make sure to create detailed financial projections, so you don’t get in over your head.
3. What’s your personality type?
- Are you one of those people who aren’t happy at work because you want to do things your way? For example, do you constantly come up with innovative ideas your boss won’t let you implement? If you were a detective on a TV show, would you be the “wild card” of the team? For those who feel stifled by the rules of corporate life, starting a brand-new business of your own can be a chance to throw off those shackles.
- Do you thrive on rules and systems? Do you feel more comfortable if someone is holding your hand when you try new things? If so, buying a franchise or business opportunity may be the ideal fit for you. Franchisors have specific rules for how they want their franchises operated and will train you in exactly how to run the business based on what they’ve learned about the most efficient and profitable methods.
- Do you excel at management? If your past experience has involved motivating employees, turning around departments or companies, or consulting, buying an existing business could play right into your strong points. You can put your own stamp on the business, fine-tune operations and make it even better.
By honestly answering these questions, you’ll be able to choose the option that fits your goals, budget, and personality.