Start-up or turnkey?
A beginning entrepreneur’s dilemma
We don't want to sell you illusions - that's why we will tell you the truth. Starting from scratch is difficult in any field, especially in business, where there is a high degree of volatility and many problems you can encounter, especially as an inexperienced entrepreneur.
Did you know that, according to official Romanian data, over 100,000 companies are born and die every year? Moreover, according to the same source, compared to other similar companies in the EU, SMEs in Romania have a very low start-up survival rate: 75% of start-ups do not pass the first year, in time that about 60% do not survive the second year of activity.
Doesn't sound very promising, does it?
Why is the Start-up program failing?
In theory, the Start-Up program seems advantageous, even promising, being an alternative that most entrepreneurs call for. However, did you ever wonder why 96% of the companies established by this program fail in the first 5 years of activity fail?
There are many reasons, but the most important one is the lack of capital. Emerging businesses fail to generate the anticipated revenues, the expenses are simply overwhelming, and gaining market visibility is difficult, in the absence of a well-established brand name. People are not willing trust in your services and products in the absence of a well-defined identity.
What are the alternatives? Are there any solutions for you not to be part of these statistics? Sure there are!
Don’t start-up - you deserve a better start
The sale, purchase and transfer of businesses will inevitably be part of Romania's future economic landscape. It is a change that we already know and anticipate - why not prepare yourself now? If you choose the option of acquiring a business already established on the market, you can eliminate much of the risks associated with a start-up.
Turnkey businesses vs. start-ups
#1 Make a profit from day one
Buying an existing business allows you to cash in immediately. Because it already has a solid customer base that you only take over, it will generate profit day one. The same cannot be said about a start-up. New businesses require more funds, which are difficult to obtain, to cover expenses for equipment, labor, space, marketing, attracting leads, attracting and retaining customers, etc. Also, the amounts needed to get a start-up running are greater than the possibility of recovering the investment in the first months of activity.
#2 A long-term investment
An existing business brings you a number of benefits that a start-up cannot provide. It holds a complete infrastructure network, from working procedures and systems to technological resources and human resources (employees and suppliers). In addition, an existing business brings you a series of symbolic benefits – market reputation and a high degree of trust from customers.
This dedicated consumer loyalty base is very valuable, because it allows you to grow your business right away - you don't have to convince or attract them, you don't have to invest heavily in marketing or positioning, which we can't say and about a start-up. This is why a turnkey business offers you the safest growth on the market.
You might think that buying an existing business is disadvantageous, because the initial investment is somewhat higher than in the case of a start-up. However, if we consider the above arguments, we can see it as a long-term investment. Moreover, it is easier to get financing for buying an existing business than to start a new one.
#3 You establish yourself a business owner and are your own boss!
Many beginning entrepreneurs believe that the only way they can get into the business environment is to start from scratch, on their own or by using a start-up program. However, thousands of small businesses close each year because the owners retire or seek other opportunities. Why not be the one to take over one of them?
Buying an established business makes you your own boss. You will have a dedicated team and a functional business. You will be able to take the path of entrepreneurship with less risk or emotion - with the acquisition, you will have access to financial information about the past activity of the company and you will be able to set your own goals, and them more easily.
#4 Minimize the risks
According to data provided by the European Commission, the success rate of business transfers is higher than that of newly established businesses. On average, existing companies maintain five jobs, while a newly established company generates only two.
Many programs encourage the creation of new businesses - but most of them are not long-term sustainable. A turnkey business can be expand faster, it creates more jobs, and already has a team and a tested concept, which you just develop.
What exactly does business transfer entail?
In short, it is a transfer of the ownership rights over an activity to another person, who will continue to ensure the commercial existence of the respective activity. Let's say you are passionate about cooking - instead of opening your own restaurant, you take over a restaurant business with everything that it involves (location, team, customers, workflow, etc.).
Four important parties are involved in a business transfer - the seller, the buyer, their advisers and some financial institutions. Business transfer should be seen as an essential step in the life cycle of any company, regardless of its size.
It involves complex legal issues, from valuation to finding a new owner and transferring the management of the company.
At this point, the idea of business transfer begins to tempt you, but you wonder if you are ready. The mere fact that you have documented yourself and read so far already brings you one step ahead of other entrepreneurs at the beginning of the journey.
You deserve a better start than a start-up - take the first step here!