Being your own boss and working independently has become more popular in recent years, especially among young people who want to take on projects with new and original approaches. Data from the Global Entrepreneurship Monitor, however, shows that just 28 % of the Puerto Rico population believes that there are good opportunities for starting a business. Maybe the problem is based on a lack of access to guidance on how to take the first steps.
To address that, Jorge Aldarondo Pérez, Executive Vice President and Director of the Corporate Credit Division of Banco Popular, talked to us about one of the most common issues for new entrepreneurs, the question about whether to start a business from zero or buy an existing one.
What you should consider
Everything depends on what kind of business you want to start. Building a new business is viable if your concept offers something unique that does not exist or can be differentiated from existing offerings.
“If the concept you want to start does not exist, the decision is easy. You have to start it. But if the concept is already available, think about it carefully, because it is an effort you can avoid,” said Aldarondo Pérez.
Does the business require licenses or permits? If part of your money will go toward obtaining them, but an existing businesses already has them, that is a factor to consider. Equally, if the business has a staff, its easier for you, because you don’t have to invest in training.
Another thing to consider is recognition level. If you start a new business, you will have to establish a plan for differentiating yourself and making yourself known. That is why entrepreneurs sometimes buy an existing business for its customer base, brand recognition or reputation for service, among other attributes.
Also, evaluate how much you are willing to invest if you start a new business and compare it to the market cost of an existing business.
The time has come!
Finally, when you make the decision to buy a business, ask about its history, including the reasons for the sale and any legal responsibilities you may acquire. Anyone who acquires an existing business should identify elements that limited the success of the previous business model.
After investigating the fundamentals of the business to be acquired or establishing the original concept you want to launch, approach a financial institution that can help you work with the capital you have to invest, your business plan and your future projections.
They say that visualizing it makes it happen. So let’s get to work!