Buying a Business: The Safer

¶ … Buying a business: The safer alternative by Lil Sawyer. Specifically, it will discuss the article's relevance to the concepts, small business implications, and theory discussed in the textbook. Anyone interested in opening and running a small business would do well to read this article by an experienced funding professional. However, it is a brief overview of a complicated practice, and relying only on this article would be a costly mistake for an entrepreneur. The text details small business decisions much more effectively, and is an excellent resource for anything thinking about buying or starting a business.

Choosing a small business is one of the most important considerations for the entrepreneur. As the textbook notes, there are many advantages to buying an existing business, from fewer problems than a start-up business, to proven success in the field, and a short start-up time. The author also notes that small business and self-employment are becoming increasingly popular. She says, "Since many experts have predicted that a significant percentage of the workforce will be working in a self-employment capacity in the next decade, business ownership is becoming increasingly more important to many people" (Sawyer, 2007). Thus, choosing, financing, and operating a small business can be one of the most important actions a modern entrepreneur can make.

Additionally, the author notes that financing, one of the most important aspects of a small business according to the text, may be easier to obtain on an existing business. The author notes that it is much more difficult to obtain financing for a startup, but businesses with proven cash flow are often much easier to finance. This makes sense, and it seems that existing businesses would be the best bet for an entrepreneur to get their feet wet in small business. They can prove themselves with the business, and acquire more cash necessary to expand into a riskier startup if they so choose.

The author speaks about financing and bringing in good counsel when choosing a business and this is good advice. The buyer should bring in experienced financial and legal experts to help evaluate the pros and cons of the venture. She also notes the team should evaluate the business and its potential, but does not give a lot of information on how to do that effectively. The problem with this teamwork solution is that the entrepreneur may rely so heavily on the team that they do not understand some of the basic concepts themselves, and this could lead to trouble down the road. The text discusses small business accounting and financial analysis is much more detail, and gives the potential small business owner much more understanding of what to look for, from an overview of the accounting process to how to analyze your (or your potential business') financial status at any time. Granted, the author is presenting a brief overview of buying an existing business, but this overview might sway some people into thinking buying a business is simpler than it really is, and lead them to rely too heavily on the opinion of experts, rather than their own understanding and knowledge.

Basically, the author is comparing opening a business from scratch to buying an existing business. The text gives a much more thorough explanation of course, because it has more space to develop concepts and ideas. The author is clearly a fan of buying an existing business, and does a good job of discouraging entrepreneurs from creating a business from scratch. She cites many facts about start-ups vs. existing businesses, and reading her article might scare some people away from starting their own business, even if they have an excellent idea. I think that does a disservice to some people. Her advice is good, and it is clear she has experience in business and start-ups, but she does not give much hope to people who have a good idea and are not afraid of the difficulties of starting from scratch, and I think this is a disservice to many people. The text notes there are several advantages to starting a new business, from creating something that never existed before to the thrill of seeing something come together and thrive. Yes, there is more risk, but entrepreneurship is risk-taking at its best. Entrepreneurs have to be risk-takers to want to be self-employed and create their own business, and she does not seem to acknowledge that fact.

This article gives a good overview of buying a business. However, it does not cover some of the disadvantages of buying a business, which can be a bit daunting. She does not cover many items a new entrepreneur should think about, including taking over bad debts or excessive inventories, difficulties in changing or reorganizing the business and employees, and even a dishonest owner who misrepresents of overvalues the business. These are important considerations, and the article does not mention any of them. In fact, the article paints a fairly rosy picture of buying an existing business, while there are many things to consider before signing a contract and paying your hard earned cash.