There’s a pandemic going on. We’re in the midst of a serious economic downturn. Many businesses are suffering. Some are failing. And now you want to start a business?
Good for you. Because now is an excellent time to start a new business. But here’s a secret: don’t re-create the wheel.
I often speak to people who want to quit their jobs and be entrepreneurs. They’ve got dreams of being their own boss, having more control over their lives and creating something that’s not only successful but changes the world, if only a little bit. All that stuff is great. But it’s a little too romantic.
Running a small business is hard work. Most small businesses aren’t glamorous or sexy, either—unless you consider distributing corrugated containers or manufacturing coated film products to be glamorous and sexy. But that’s what most businesses are: organizations that employ people and capital to provide important products and services that keeps the world turning. You can still have a great time and make lots of money even if you’re not on the cover of Forbes.
Which brings me to the secret I mentioned above if you want to start a business: don’t re-create the wheel. What do I mean by that? It’s that right now is the perfect opportunity to buy an existing business. Why?
For starters, interest rates are low and capital is plentiful. Not only are banks flush with cash from the Federal Reserve, but private investors are always looking for good opportunities to park their money somewhere other than the volatile stock market. Thanks to the CARES Act, if you come across the right deal, you can get it financed through a Small Business Administration Section 7(a) loan and your first six months of principal and interest payments would be forgiven (that’s $33,000 on a $500,000 deal, not chump change).
Second is that the demographics are right. The average age of the typical small business owner is over fifty and many in the current generation of baby boomers, sick and tired of running a business especially after this latest health scare, are looking to exit. That presents a great opportunity for you to buy into a business at a potential discount. Add to the mix an attractive capital gains tax rate—it’s still at an historic low—and you’ve got another great incentive to dangle in front of a potential seller.
Buying a new business is immediately putting you in scoring position. You avoid the startup costs. You’ve got a workforce, assets, property and a customer base to fund your operations. More importantly, you’ve got you. You’re going to bring new ideas to this company. You’ll likely energize the people working there. Because you have no baggage, you’ll have an easier time getting rid of unprofitable products and unproductive employees. You’ll also bring your new vision for what you want the company to be. Yeah, you’ll change the world.
So that’s the secret: don’t start from scratch. Buy something. Go to BizBuySell to get started. Or if you want to buy an ecommerce business, check out Quiet Light Brokerage. Line up your financing from a bank, an investor, a few family members. Get an advisor—an attorney or accountant—to help you. Focus on the industry you want to be in. Take a few months and do your search. Find that right company and be the entrepreneur you want to be.
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