Buying an Existing Business vs. Starting Up a New BusinessWhy buy an existing business in Taos when I can start my own? SBA says 50% fail during first year The U.S. Small Business Administration has seen lots of small businesses come and, unfortunately, go. According to the SBA, over 50% of small businesses fail in the first five years. Why? What goes wrong? In his book "Small Business Management," Michael Ames gives the following reasons for small business failure: 1. Lack of experience 2. Insufficient capital (money) 3. Poor location 4. Poor inventory management 5. Over-investment in fixed assets 6. Poor credit arrangements 7. Personal use of business funds 8. Unexpected growth 9. Competition 10. Low sales Source: U.S. Small Business Administration I do not want to paint a picture of “doom and gloom” for every new business. There have certainly been successful new businesses in Taos, however, they are few and far between. The advantages of buying an existing business Reduced financial risk - You're buying a business with a track record. If the business has made $100,000.00 per year for the past 8 years the odds are in your favor of earning the same amount if you just follow the same procedures the business has been successful with. If you're full of "piss & vinegar" like most new business owners you have the ability to add your own ideas and energy and bring the business to a new level and a higher income. Immediate cash flow - An existing business has a record of its cash flow. You can expect to earn roughly the same income immediately. Fast learning curve - why learn at your own expense when every mistake you make costs you money? Buying an already successful business saves you all the costly mistakes the original owner has already gone through.
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