an online conversation
about design management


buying a design studio

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.

 

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