I want to preface this article by telling you there is no right or wrong answer to this question. Entrepreneurship isn’t a cookie cutter mold and Black entrepreneurs, just like the Black community, are not monolithic. Choosing to buy or start your Black-owned business is going to be based on your personal lifestyle, your research, your passion, your drive, and your skill set. Not everyone who can perform with skill is destined to be a business owner. Let’s talk about it.
It’s been reported by the Small Business Administration that only 10% of businesses actually succeed in their first year, while a whopping 90% fail. This is an alarmingly high figure – one that poses constant major challenges for Black entrepreneurs. They may prefer to buy an existing and thriving business, rather than take the chance of starting out on their own.
Here are a few ways to determine which is the right path for you. Of course, we highly encourage you to do your own research and further investigation into each, as we are merely scratching the surface here.
Are You Built for a Startup?
Ask yourself if you feel you can take your idea from something that exists only in your mind to a profitable business. Do you want to put your time and energy into registering a business, coming up with branding, finding vendors and suppliers, thinking up a business name, finding a location, and so on? Or would you prefer these things already be done, with clients to boot.
If you are not prepared to do all that from scratch, or you don’t have the time, then you definitely want to consider investing in an existing business
Do Your Skills Match Your Desire?
Not only do you need the desire, you have to have the right skillset. If you have never started a business before, you will quickly learn how much work goes into it. If you are not a self-driven, extremely organized planner, startup is definitely not for you. If you shudder at the thought of paperwork in piles on your desk, or hiring and firing employees, then you should consider looking at an existing business that already has experienced staff members who have been there for some time.
There’s a lot of admin work involved in running a business and nobody who owns one can get away with not being involved, whether they have a partner or not. Buying an established business will allow you to focus on only those areas of your expertise and outsource the rest.
How Much Is It Going to Cost Me?
Starting a business is by far the least expensive way to go. Think about it this way – when you buy an existing business, you are essentially paying for everything you didn’t want to do. Someone else’s hard work built the business to a point where you want to buy it. You not only get all the tangibles of an existing business, but the intangibles as well, including crucial goodwill and customer rapport. All these things come at a price. It may require you take out a loan, seek investment partners, or use your own savings. On the flip side, starting your own Black-owned business is something you can do for about $1,000, including registering it and buying a logo. If you are starting a retail shop, you will also need to account for rent and/or purchase of the facility. You don’t have to worry about that with an existing business.
Where’s the Money?
An existing business is going to come with a documented financial history, regardless of profitability. It will have generated revenue, which is different from profit (a distinction fit for another article). You want to buy a business that has a proven track record of consistent revenue. It’s your job to make or keep it profitable.
If you decide to purchase an existing business, you will have to go with the existing brand’s customer value and the business’ perceived popularity. It is a rigid system that does not allow for many changes or personal touches. So, keep that in mind.
The bottom line is that this decision comes down to a personal choice.
Did you buy or start your own Black-owned business? If you were undecided before and don’t have a business yet, where do you stand now? Let us know in the comments.