YOU don’t need a unique or new business idea to start a business.
Christo Botes, executive director at Business/Partners Limited, told SunMoney that a start-up business or franchise isn’t the only path to becoming a successful business owner. Buying an already existing business is also growing in popularity.
Botes said Mzansi’s high startup failure rate was contributing to the shift from start-up ventures to acquisitions. According to the 2016-2017 Global Entrepreneurship Monitor report, Mzansi’s established business rate – the percentage of the adult population that are owners or managers of businesses that have been in operation for more than 42 months – is only 2,5%, one of the lowest in the world.
“This low percentage of established businesses highlights the difficulty many entrepreneurs face when starting and even sustaining a business. Research shows that the first 1 000 days of a new business are the most critical, and that many new business owners tend to fail within the first three years of operation,” he said.
Opting to buy an existing business instead of starting a business from scratch is a safer and more effective way to becoming a business owner as it is less risky.
But Botes said that less risk doesn’t mean no risk. “There are still risks which is why it is important prospective buyers conduct a thorough investigative research of the company they are considering purchasing before they make a decision. Research should include why the business is being sold, as well as how competitors are faring in the industry.
“Review ALL records and buyers should take heed of any lawsuits, tax audits and insurance disputes, as well as the financial history and intellectual properties of the business before buying,” he said.
