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Starting up a Business

Five methods in going into business

1. Starting up a business
2. Buying an existing business
3. Inheriting a business
4. Franchising
5. Management Buy Out

Starting Up A Business

Starting up your own business from scratch requires attention to the following:

  • Identifying a target market and its basic needs

  • Assessing size of target market and its ability to sustain a profitable business. Determining amount / availability of start up capital.

  • Devising a product strategy the matches the target market.

  • Devising a competitive strategy.

  • Find suitable location.

  • Selecting / training staff.

  • Obtaining / meeting legal obligations.

  • Developing a carefully considered business plan.

Buying an existing Business

When you buy an existing business, the price that you pay should be assessed on its potential to earn profit.
Two methods that can be used to determine reasonable value:
1. Capitalized Value
2. Appraised Value

Inheriting a Business

Inheriting an ongoing business through the death of a relative or friend is another method of getting into business.

Franchising

Buying a business, this includes involvement and support of a large organisation (Franchisor).
There are a number of advantages and disadvantages in Buying and Existing Business.

Buying an existing Business

Advantages

  • Receive immediate income from sales to existing customers

  • Save time & effort to equip and stock the business yourself

  • Proven location

  • Established relationship with suppliers & creditors and existing employees

  • May be cheaper than trying to assemble bits and pieces yourself

  • Proven track records makes an existing business easier to finance

  • Risk of failure is significantly less than if you tried to

Disadvantages

  • You are stuck with the previous owners bad decisions

  • You could pay to much for assets

  • You may inherit ill will felt by some customers

  • Poor morale amongst the staff

If you are looking a getting into business or are already in business, Tony Taktak & Associates can show how to build wealth, through long - term investments.

 

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