Do you own a car? Probably. Most people do.
How did you come to own that car?
A) Go to the auto parts store and buy all the individual parts? The wheels, the engine, the battery, the glass, some steel or aluminum panels, bumpers and miles of electrical cabling…
Then assemble everything on your driveway… figure out how to put all the pieces together so that it works and you can drive it?
Or did you…
B) Go to a dealership, pick the car you wanted, test-drive it and then finance it through the dealer so you can pay for it over time?
I’m going to assume you chose option B, right?
So then tell me…
WHY on EARTH would you START a business rather than BUY one that someone else has built but no longer wants to own?
Starting a business is like trying to build a car.
Think about it…
It takes a MASSIVE amount of time, energy and money to get something off the ground, let alone make it profitable.
And yet according to Entrepreneur magazine and the Kauffman Index of Startup Activity, 6.6 million Americans START a new business each year.
WHY, OH WHY, anyone thinks it’s a good idea to start a business is absolutely beyond me. Starting a business from scratch is CRAZY.
The failure rates are staggering…
At least 60% of small businesses fail in the first year alone… 80% within the first FIVE… and a whopping 96% of small businesses fail within 10 years of being founded.
With a 4% success rate, starting a business is one of the slowest, most painful ways to permanent self-employment.
Why is that? Simple…
When you start a business from scratch, you don’t have any…
And — perhaps most importantly — you don’t have a reputation.
No wonder it’s so difficult. You have virtually nothing.
The smarter thing to do is to BUY a business highly related to your passion and finance it using other people’s money (OPM).
Just like you would BUY a car, rather than BUILD one.
There are more than 3 million businesses for sale in the U.S., U.K. and Australia alone…
More than 95% are small and medium-sized businesses, with less than $20 million in annual sales revenue…
I know from experience that a typical business broker will only sell approximately 8% of businesses on their books in the first 12 months — and 75% of all their businesses don’t ever get sold.
Which means there are quite literally millions of opportunities out there that no one’s taking advantage of.
They are choosing to START businesses instead. Which is CRAZY. They’re building cars in their driveways and then wondering why they aren’t getting anywhere.
Some people want to start a business because they think it’s cool and sexy.
But there’s nothing cool and sexy about losing all your money, wasting all your time and putting your health and relationships at risk.
Some people want to start a business because they believe there isn’t a business anywhere in the world that does what they want to do.
Even if that were the case (and I am positive that it isn’t), it’s still smarter to BUY something similar and innovate from within.
Because guess what?
While you are working on your new thing (whatever it is), you and your business will still be making money from the existing products and customers.
You want to create something new? Cool. If you BUY a business you will have…
- Employees to help you…
- Equipment you own…
- Premises you occupy…
- Cash flow to finance it…
- Customers to beta test and eventually sell to…
And, most importantly, an existing reputation you can leverage and build on.
It’s really not rocket science…
Go BUY a business and pay for it using other people’s money.
Don’t start a business from scratch and attempt arguably the most impossible mission known to man or woman. (Tom Cruise couldn’t even do it.)
You know I’m right.
Until next time, bye for now.
Editor and co-founder, Dealmaker Wealth Society
P.S. Something cool happened yesterday! I was featured on the latest episode of the Business Growth Café podcast. Host Angelo Ponzi and I really hit it off — we dug deep on seller mindset and how best to value a business you’re looking to buy.
Check it out from your computer or smartphone by listening below.