DON’T START A BUSINESS – BUY A BUSINESS

Yesterday’s announcement that HSBC has this year loaned money to 65,000 new business start-ups struck me as a bizarre statistic.

Why would you start a business with all the inherent risks, lack of customers and no cashflow when for probably less money you can buy a business with a track record, customers, a proven business model and, most crucially of all, cashflow from day one?

I have started 5 businesses in my life and frankly, if I had my time over again I think I would rather buy a business. The thing that people forget is that the business you buy doesn’t have to stay that way, you can grow it and develop it just like a start-up. But the absolutely crucial thing is always the cashflow, a start-up will take three times as long and three times as much money as you expect to get it going and all that time you are probably not drawing a salary either. That makes it a high risk and expensive proposition. An existing business with a good history and proven accounts will pay you a return on your investment from day one and keep food on the table.

Most small businesses that we sell  http://www.amberglobe.co.uk/search.aspx and which produce enough profit to pay a reasonable salary to the owner will sell for one to times the profit. After no more than two years you have got your money back and are still earning good profits. If there’s a property involved then obviously you pay more but you have the security of a freehold to back up your investment.

I would be surprised if more than 10,000 small business sales are completed in the UK each year, which stands in marked contrast to 65,000 start-ups. http://www.amberglobe.co.uk/sales.aspx
There are thousands of businesses for sale in the UK of just about every size and sector, and pretty much all of them are advertised on the internet on websites like http://www.amberglobe.co.uk/ or www.businessesforsale.com.