Why Buying A Company Can Be Better Than Starting One?
With the exception a few minutes of a feel good story at the end of the broadcast, the evening news these days is pretty depressing. Along with war, natural disasters and political strife, it is no longer shocking to hear stories of such corporate mischief as Volkswagen and Bank of America have wreaked upon their members and customers recently: pressure from the top and complicity through the ranks to practice deception and fraud in order to manipulate the bottom line. The one problem with all this effort to increase the bottom line is that it is most likely about the bottom line of the CEO - not the bottom line of members, customers or shareholders, or even those complicit employees. The average citizen on the street is increasingly aware of the significant gap between their own influence on the economy and that of a small handful of people who earn, invest, and control the major portion of their nation’s capital.
The issue is control and influence of capital. It is clear that those who do not have much capital cannot sway policy that will change things in their favour. Those who fortunately do have capital are not in the habit of doing anything that will decrease their coffers. The past 30 years have seen only greater and greater economic inequality in the richest nations of the world.
I do have hope, though. To men and women looking at their prospects within the machinations of today’s marketplace, I say this: do not get a job. Buy and own your own business!
Those who own their own businesses have distinct advantages over those who simply punch the clock for others. The least of which is the opportunity - no, the necessity, I should say - of controlling your own fortunes and influencing the capital which you own. For your own livelihood and that of those you employ, you can do your small part to democratize wealth. You need not be resigned to accepting slashed wages while the CEO’s salary passes seven figures. You need not try to ignore distasteful antics of management and board members who play fast and loose with your income through personal and corporate indiscretion.
Let me be quite clear: I do not mean that you should start a business. Starting a business is inherently risky and requires more pure entrepreneurship than most individuals possess. Huge effort and investment must be made before you can even know if you have a profitable idea. What I am advocating is that you should purchase an existing business and run it yourself. Outlined below are just three compelling reasons that I say what I say.
Established revenues. Established businesses are likely to already have a stable revenue stream, which lenders and equity investors like. I am talking about the day to day goods and services that serve as the life-blood of every community, which, if run smartly, are reliably profitable. Your investment and that of your lender are less at risk from the start.
Established customer base. Flashy tech startups must develop a customer base from nothing - not an easy endeavour. Heating and air conditioning companies, health clubs, landscaping businesses and the like will already have a strong, established base of customers.
Less Risk. Growth might be slower in an established company than in an exploding startup, but with an established business, you are less exposed to risk. A new company customer is not yet loyal and so must be continually engaged and wooed. Quickly growing companies also tend to attract a more dogged competition as everyone is trying to get in on the good thing. In the meantime, you are providing your clients and customers with trustworthy goods and services, and adapting to community changes to offer additional services and customizations. Growth might be slow, but it is steady and sure.
Purchasing a business to run is not without its risk—I do not begin to imply this. However, it is much easier to purchase an existing company than to start one. You can hit the ground running instead of having to put so much into simply attaining critical mass. And as the owner, you make the decisions that create the outcome you want. As CEO, you now have the control of your share of the economy. You can do the right thing for your employees and community and in so doing, shrink the gap of economic inequality.
