Start up or buy existing?
One of the first questions that you ask once you decide you want to work for yourself is: should I start a business from scratch or buy an existing business. We looked at both sides of the equation many, many moons ago and decided to start from scratch but before you make a decision it's worth investigation.
Buying an existing business: Pros
- buying a studio that is already running efficiently and profitably takes a lot of the stress out of going into business.
- it's easier to arrange finance with an established sales record, rather than presenting cash flow projections of business that has yet to be started.
- buying into an existing cash flow
- starting a business from scratch introduces another competitor into the market whereas you eliminate a competitor when you buy an existing business.
Buying an existing business: Cons
- paying for someone else's success
- reputation management: you are buying the reputation of the existing business – good or bad
- you have a 'ready-made' employees (that can also be good or bad)
- due diligence needs to be exhaustive
Starting a studio from scratch: Pros
- you can shape the business to suit your tastes
- you can tailor the clients to your business plan
- you can hire the staff of your choice
- you can literally position the studio in the suburb of your choice
Starting a studio from scratch: Cons
- need 'start-up' funds to provide income to meet expenses until cash flow can take over
- need to source clients and staff
- finance may be difficult to obtain
- the buck stops with you (back to the good or bad)
Perhaps merging is the answer?
Read more about managing a design studio in The business of design.