Did you know that throughout the country of Canada, there are almost 100,000 new businesses that are started each year? Entrepreneurship is certainly ingrained in the economy of the nation, and every year more individuals decide to leave the workforce to start their own companies.
However, building a brand from the ground up is not the only path to business ownership. Another strategy is to search for businesses that are for sale that you can purchase and take over leadership.
This brings us to an important question. If you live in Toronto, which is the better option for you; starting a new business or buying an existing one? Let’s break down the pros and cons of each to make your decision a little simpler.
A New Brand: The Pros and Cons
Starting a new company allows you to pursue a specific passion of yours. There are some significant advantages to building your own business, but there are also some disadvantages.
First of all, creating a new brand means that you get to decide what type of product you sell and how the company operates. In general, the cost of starting a new business is much lower than buying an existing one. That means if you have limited resources, it might be more feasible to create something new. Additionally, you can ease into starting a new brand.
On the other hand, there are several negatives as well. First, you have to build a customer base starting with nothing. Second, it is harder to secure funding for your new business since it will be considered risky by lenders. Additionally, building a brand requires a ton of work, so you will likely work long hours and deal with a lot of stress before you even come close to significant profits.
Buying a Business: The Pros and Cons
Purchasing an existing business is more of an investment strategy. Since you are paying for a company that already has a history, there are significant differences in how it can be successful when compared to starting a new brand.
An existing business already has many things that a new company doesn’t; operations, employees, a financial history, and access to greater funding. Lenders are more likely to give out larger loans for an existing company that has demonstrated the ability to produce revenue.
For example, finding restaurants for sale in Toronto will grant you a business that has already served customers for a while and may not need many changes to continue growing. Also, you do not have to worry about building a team from scratch or coming up with entirely new business processes.
Businesses cost a lot of money, even if they are still small. Most people who leave the workforce may not be able to afford a sizeable down payment on a loan to buy a company outright. Although having employees and operations in place can be a good thing, it can also make your role as an owner harder if they were ineffective in the past. You will have to undo the negative culture and processes to reach a greater ROI.
Toronto, Ontario is a vibrant city with thousands of businesses in operation. If you have an entrepreneurial mindset, then there are only a few better places in Canada where you can accomplish your goals of owning a business. You simply have to decide whether you want to start a new brand or purchase an existing one.
The decision should come down to your resources, interests, and capabilities. If you have a healthy amount of cash reserves and a desire to take over an established brand, then you should consider buying a brand that already has a history of success. Perhaps your leadership could take them to new levels, though it is important to conduct thorough research into the company to decide if it is positioned to grow.
On the other hand, maybe you have limited resources but a great idea for a product that you are passionate about. In this case, building a business on your own might be the best solution. It is often a high-risk, high-reward option if you can guide this new brand to profitability years from now, though it will take a ton of hard work.
Weigh the pros and cons of each entrepreneurial path. Consider what your capabilities are for leading a business and if you have the experience needed for either option. Analyze your budget for needed income and the initial costs to see if you can even afford these opportunities with or without additional financing.
The more time you spend researching the market and these opportunities, the more equipped you will be to make the right decision for your future.