Like anything else, if owning a business was easy, everyone would do it
When I ask successful business owners to share what the secret to their success is, the answers are very similar: Keep at it. Don’t give up. Stay focused.
However, there are thousands of new business owners who fail every year and it isn’t from lack of effort. Many times, they have borrowed money or against assets, quit their jobs and poured every hour and dollar into their enterprise only to see it fail.
According to the US Bureau of Labor Statistics, new business success rates range between 10-20% depending on industry and only 18% of new business owners will be successful.
Within just five years, 50% of new businesses will fail, according to the U.S. Chamber of Commerce.[1]
How can this be? It certainly can’t be from lack of effort. Research shows that the top reasons for failure have nothing to do with effort but with these factors:
Poor product market fit
Wrong marketing strategies
HR/Personnel issues
Cash flow [2]
When starting a new business, there is no way to be sure that what you make or do will be in demand, that you will properly market it, that your employees will not be an issue and that cash flow will be sufficient.
Imagine not having to worry about any of these “business killing” situations. Well, if you want that kind of assurance and would rather have a 90% success rate instead of a 90% failure rate, consider buying an existing business.
Entrepreneurs buying an existing business have a success rate of over 90% [3]. The reasons are many, but a huge factor is that many of the top challenges listed above have largely been solved by the time an owner is ready to sell: There is demand, the marketing is reaching customers, employees have experience and revenues are known, if not steady. Additionally, access to capital is much easier as banks will often not loan to startups.
Buying a business also doesn’t mean that you have to give up on your “million-dollar idea” either. The financial stability offered by owning an existing business can help to launch new ventures or enable you to diversify your operation to include it.
The time to buy a business has never been better than now. The retirement of the baby-boomers is creating an abundance of lucrative and exciting opportunities for entrepreneurs. And even with an increase in interest rates, funding is still affordable and readily available.
To learn more about business ownership or to see the listings our office has to offer, please click here
Justin Cotta Holmes
[1] https://www.chamberofcommerce.org/small-business-statistics/
[2] https://explodingtopics.com/blog/startup-failure-stats
[3] https://advocacy.sba.gov/wp-content/uploads/2019/06/Small_Biz_Facts_Why_Do_Businesses_Close_May_2018_0.pdf