In last month’s article, we discussed the merits of purchasing an existing business. As outlined in the article, generally the most significant benefit of purchasing an existing business is the ability to generate cash flow quickly due to inheriting an established customer base.
However, let’s say the opportunity to purchase an existing business is not available, or the vendor is asking too much for the assets and goodwill. Perhaps you are purposely looking for opportunities in an unfilled marketplace. What are your options now?
You have a couple choices. First, you can explore the acquisition of a franchise, although many find that to be cost prohibitive or not the type of business structure they wish to start with. If a franchise doesn’t appear to be the right fit for you, then you may need to create your own start-up company. Let’s take a look at what starting your own company entails and review some important issues for you to consider.
There are many different definitions on the internet regarding start-up companies. I like to define a start-up business as an idea that you put into action. You could also think of it is as the initial stage of a business model in which you plan to define your product/service and establish a customer base from which to grow.
I’ve seen many start-up businesses throughout my career, and they all have one thing in common – the fulfillment of a dream. I do believe this “dream” is important for all entrepreneurs and business owners, but passion is also mandatory because this will likely be the most stressful endeavour you embark upon. It will test you financially and emotionally, but the rewards can be immensely fulfilling.
Next month, we will continue with this topic and look at some of the other important issues and rewards associated with a start-up business.
Jonathon (Tug) McGraw, BCOMM, CPA, CA
BDO Canada LLP
Jonathan can be reached at: email@example.com