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Startups Sure Are Risky Business

monopolyIt’s hard to overstate how risky starting a new business can be. First, we can look at the odds of success and unfortunately, they’re not good. Around 97 percent of new startups fail before they get through their first year. That means you need one incredible hook, unbeatable marketing or a solid business plan to gain any ground at all.

But let’s be optimistic and say that you have all that moving forward along with a little luck. Then, you need to think about the money you’ll need to spend. On average a startup business will cost around twenty to thirty thousand dollars. If you start one online you can shave about 2/3s of the cost off, but that’s still a lot of cash. Most business owners end up paying for this out of their savings and then quickly resort to loans. Loans are expensive due to the insane levels of interest some companies charge.

Now, you might think that it’s worth spending that much money if you know eventually you’ll make profits…except you don’t. Even if we ignore that 97 percent margin a lot of businesses do begin making zero profits and some don’t even manage to break even. This puts the company in financial trouble immediately and ensures that you’re starting off at a loss.

You should be beginning to see the issues with a startup, but wait because there’s more. Even if you do make a profit, it’s probably not going to be at the level that you hoped because you won’t have a large enough share of the market. Think about starting a business like becoming a published author. All writers dream of being the next J.K Rowling when instead they actually become John Bloggs. Who’s John Bloggs? No one you’ve heard of because only around ten thousand people buy his novels. That might seem quite a lot, but it probably means a lot of hard work has led to making barely above minimum wage. That’s exactly what will happen to you if you start a company that hasn’t gained enough interest from customers.

So startups aren’t the money making machines they might seem? But don’t worry there are other options, and one possibility is buying an existing company.

Already Owned

There are huge advantages to buying an existing company rather than starting one yourself. One benefit is that everything will be there for you to use if you choose. For instance, there will likely already be a full team of staff. You may want to look at warranties when buying a business if you want to guarantee they are still there when you make the final purchase. But, if the employer agrees that cuts your recruitment costs. Not to mention, all the systems, the tech and services could also be set up.

It’s like starting a video game halfway through. All the pieces are in place and that means you can play around with the trophies and rewards that they’ve already unlocked for you. As well as that, you’ll be in a strong position to improve the company in whatever way you want. Of course, the biggest advantage is the customer base.

It already exists! There will be people, clients and customers who have been buying from that business for years. They’re not going to disappear simply because it’s under new ownership. Of course, it would be a lie to say that an existing company is never going to fail. It very well could, and you still have a lot of important decisions to make. Your plans to further improve the business might easily backfire. But assuming everything goes well you could have a business under your ownership that you didn’t have to build from the ground up.

Grow A Branch

New scenario: you have been working in a business for a long time – at least five years – and you’ve decided you have the skill or knowledge to work independently in the industry. You have also built up a strong network of contacts over the years that you know you can use to your advantage. So, you’re thinking about heading to your boss’s office and handing in your letter of resignation. But wait because instead, you should be handing them a pitch.

A brilliant thought out pitch that is guaranteed to provide massive benefits for their business. You should be pitching that they open a new branch or sector of their business with you at the helm. Now if you do this, you’ll need to prove that you have been an indispensable part of their team for years. You will have to show that you’ve gone the extra mile for their company and proved you’re a true team player. If you can do that and you have a solid plan, they should have no reason not to hire you.

The benefit of this is similar to buying an existing company. You will already be tied into a successful name that you can use to build your own brand. The downside is that you won’t be in full control, but the dirty secret is that business owners never are. They always answer to someone.

A similar possibility would be to use one of the many, many existing businesses that sell franchise opportunities. Basically, a fruitful business offers you the chance to set up your phone version of their company. This can be anything from a care home to a fast food restaurant. You use their model of business, run the branch and reap the profits. If you want the most famous version of this business venture, look no further than Mcdonalds. They started off by selling stores to couples and still sell new outlets to private owners who run them.

In Everything But Name…

Or finally, you can start a business without the risk or the dangerous costs. The best way to do this is to not set up a business at all. Instead, you use a site like eBay to set up your own store selling absolutely anything that you want. Give the site small percent of your profits and keep the rest for yourself. Costs stay low, and risk is minimal because if it does fail, you sell everything you bought off and walk away.

If you think eBay selling isn’t really a business, just remember, proper sellers, are taxed in the same way a street shop merchant is.

You see, no matter what your budget or desires there are ways to run your own company without building it up from scratch and taking on the risk that comes with it.

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