Buying, starting or franchising a business

Starting versus buying a business

You want to get into business and be your own boss. But should you start a new business or buy an existing business? To help you decide which might be right for you, here’s an overview of the pros and cons.

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In this article

Starting a new business

Advantages

You can:

  • Have the satisfaction of starting a new business
  • Move at your own pace
  • Choose the most suitable location 
  • Buy the most appropriate equipment 
  • Negotiate new deals with suppliers
  • Choose your own staff
  • Invent your own processes and operating systems
  • Create the business image you want.

Disadvantages

It may take time to make a profit. Suppliers may not extend credit at first, meaning you'll need to pay upfront.

You'll spend time and money on:

  • Researching viability
  • Building a customer base and a steady revenue stream
  • Sourcing equipment
  • Selecting and training the right staff   
  • Developing effective systems.

What is goodwill?

When buying an established business, the purchase price may include goodwill. This covers intangible assets, which includes brand recognition, a loyal customer base, and intellectual property developed by the previous owner.


Buying a business

Advantages

It’ll be quicker and easier to get up and running, with many factors already in place:

  • Customers
  • Equipment and premises
  • Systems, including stock levels, purchasing arrangements and production levels
  • Trained staff
  • Brand  
  • Intellectual property, e.g. copyrights, trademarks, patents.

Financial data means you’ll have an idea of how much money you can make. It may be easier to borrow money, as you’ll also have evidence of cash flow.


Disadvantages

Set-up costs may be higher than starting a new business.

If you fail to check out all aspects of the business (due diligence), you may be buying:

  • Unhappy customers or suppliers due to poor systems or services from the previous owner
  • Sub-standard operating systems
  • Old, obsolete, or poorly maintained equipment
  • Unsuitable staff due to poor training, attitude and values, or personality clashes
  • Out-of-date or old stock that may be hard to sell   
  • Overvalued goodwill.

Starting a business

There is a lot to think about when starting a business, this video runs you through some of the things you can start checking off to get yourself open for business.

Contact an ANZ Business Specialist

Our specialists understand your kind of business and the challenges you face as a business owner. We can help you figure out how to make your business grow and succeed.

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Important information

We’ve provided this material as a complimentary service. It is prepared based on information and sources ANZ believes to be reliable. ANZ cannot warrant its accuracy, completeness or suitability for your intended use. The content is information only, is subject to change, and isn’t a substitute for commercial judgement or professional advice, which you should seek before relying on it. To the extent the law allows, ANZ doesn’t accept any responsibility or liability for any direct or indirect loss or damage arising from any act or omissions by any person relying on this material.

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