If the idea of buying a business or investing in one excites you – you are not alone. Thousands of first-time buyers and investors join the crowd every year. For some, it is the idea of testing their entrepreneurship acumen in an existing business, while for some it is about making their money work hard. However, for many people, the decision is not easy to make – should you buy a business or invest in one?
We have worked with thousands of business owners, buyers and investors over the last few years and have closed multiple deals – both in business buying and investing. In this article, we will share a few practical insights from our team to help you understand the varied implications of buying and investing in a business. We recommend that you begin by asking yourself the following questions – the answers will help lead the way towards the most suitable opportunity for you.
- What is Your Primary Objective?
Are you looking for complete ownership, control, and a deep-dive into entrepreneurship? Are you excited about building your dream venture? Do you want to be your own boss? If the answer to all of the above is ‘yes’, then buying a business is more suitable for you. Investors are limited in terms of the amount of control and decision-making power they exercise in a business. Of course, there are various rights of an investor that you can exercise to significantly step-up the amount of control you have – but the owners are still going to have the final say and a much higher involvement in running the business.
- What is Your Professional Background and Industry Experience?
Do you have some experience in the industry to which the business belongs? Do you have prior experience in running a business – either first-hand or through a family member? Do you have adequate network in the relevant domain? If yes, then buying and running a business on your own will be a lot easier and more appropriate. However, if you are not sure about your background and experience being a good fit for the business, then investing in it might be a sound proposition.
- What are the Resources at Your Disposal?
Resources are critical when it comes to running a business. Does the business have an existing, well-established team, or do you have to build one yourself? Is there a loyal client base that you can rely on? Are the distribution networks on auto-pilot or will they require your constant supervision? Is the raw material coming steadily from an assured supply base, or is vendor management going to be a constant headache? If most of these pieces are sorted out, buying is a lucrative possibility. However, if the business is of high potential but still needs a lot of fixing, it might be better to invest your money and help the owners figure it out with whatever you can.
- What Are Your Existing Commitments?
In reality, the decision to buy or invest in a business is not isolated from other decisions in one’s life. Contrary to popular belief, there is no ‘right time’ to buy or invest in a business. There are no rules – anyone can put money in a business at any point in time, provided their existing commitments are in sync with the decision. Having a wonderful day job that you absolutely love? Invest in a business. Looking for a career transition? Consider buying your dream business. Have significant financial commitments towards your family? Start by investing in a business – consider buying one later. Looking to build an enterprise that will sustain your family for generations? Go for buying a business. These are just a few examples – the best way to go about it is to map all your personal and professional commitments to the two options (buying and investing) and arrive at the best opportunity for yourself.
So, what are you waiting for? Choose the option that is best for you and take the plunge! We have helped thousands of business buyers and investors in choosing the right business opportunity through our platform. We help you get matched to the right businesses, communicate confidentially with business owners, and much more. Register with us today to kickstart your journey, or write to us at [email protected] to know more about what we do and how we can help you.