When starting your own company there are no preconcieved notions about what a company should be, what your image is, or what can or cannot be done. Often, new technology must be purchased and thus it is the most up-to-date on the market giving you a technological advantage over your competitors. Many entrepreneurs start their own company because of the unmet need mentioned in the opening story. Thus the products are unique, unlike anything already out there. While some entrepreneurs start companies to grow and harvest, many choose to keep their company small and under their own control. They make a career of running their company.
There are also many problems with starting a new company. While no one has a pre-conceived notion about your company, the bankers don’t know you either. Thus, banking and credit is more difficult.
When you purchase an existing business you are also purchasing the current customers. Processes and suppliers are already in place. Name recognition has already been established.
When you purchase an existing business you are also purchasing the current customers. Processes and suppliers are already in place. Name recognition has already been established.
Entrepreneurs are most successful with a business suited to their skills and interests. Finding one such company, at the time you are looking to buy is not always an easy task. Additionally, employees may be very resistant to change. They may want to continue in past patterns and have difficulties adjusting to a new boss when they have been working their several years. Often they feel they know more about how the business should run than their new boss does. Existing businesses also come with existing reputations- some good, some bad. Fighting a bad reputation, such as a restaurant with poor service, or being known as a company who does not pay it’s bills, is a difficult hurdle.
Answer: d
When performing due diligence it may be helpful to hire an accountant or lawyer familiar with the process. Often these outside sources can be more methodical and unbiased. They also have access to more resources, data, and staff and may be able to complete a more thorough task in shorter time.
Discounted cash flows are commonly used and are the most theoretically vigorous method.
There are different ways to buy a business. You can buy the owners interest completely. You can buy a partial share and be a part owner in the company. You can buy the key assets such as machinery and/or inventory but start your own company. And you can force a takeover. This is primarily done only for publicly held companies.
Franchising is a proven low risk way to get into business. You will receive training in following a proven, successful model. Areas which you may be personally week in, such as advertising, are controlled by a standard formula.
Because everything is controlled you have lost your freedom to be creative, change hours, try something new, etc… Oftentimes vendor may even be controlled irregardless of their performance with you. Ultimately success can depend on the success of the parent company. If your store is running well, but others are not, the whole corporate structure may shut down and you would lose your business.