Two quick questions.
Who likes pizza and is home-made pizza better than that bought in a restaurant or takeaway? If you hungry for more then, please allow me to explain.
The answer to the first question is an easy one. You either like pizza or you do not. A straightforward yes or no is all that is required.
The second question is more difficult to answer and your response should really be ‘it depends.’ While this may be something of a ‘fudge’ (cutting carbs for a month is clearly having an effect on my subconscious) what will influence your answer is your overall experience of both types.
If the term ‘home-made pizza’ brings back memories of the frozen variety made up of tasteless toppings heated to a near volcanic temperature for the sole purpose of taking the skin off the underside of your mouth balanced on an under-cooked, soggy base, then I can predict which camp you will be in.
If, however, your recollection is of pizza cooked in a wood burning pizza oven built in your own yard after having enjoyed the experience of making the dough, crafting the toppings, cooking and sharing the end product with friends and family as part of a social gathering, then your answer may be somewhat different.
The same applies to your experience of buying pizza elsewhere, either dining in a restaurant or from a takeaway. There are good and bad amongst both, and it is wrong to provide anything beyond a generalisation if asked which is best. The true answer to the question is that it depends on the pizza.
I was recently asked whether in my experience it was better to start up a business or to buy an established one and develop it. Like with pizza, there is no simple answer to this. It all depends. In this instance, on the business and the person.
Starting from the beginning and building your business as you want it to be, can be rewarding and fulfilling. It provided you with the opportunity to mould a business to your precise requirements and to leave your stamp on it. What it will not be is easy. Start-ups involve a significant amount of hard work and come with no guarantee of success.
The business news regularly reports stories of the overnight success start-up businesses and the ludicrous amounts of money for which they are sold. This makes starting up your own business exciting. The same news does not often report on the businesses that fail unless their failure is in some way novel or newsworthy. There are lots of start-ups that fail early on, so many so that they rarely make a ripple amongst business commentators or analysts.
The start-ups that do succeed usually have a great idea or product, strong management and a committed team. They also test the market well in advance of their launch. Professionally, I like start-up businesses and the energy they bring but recognise the difficulties they face.
By contrast, many business experts consider buying an existing business to be a safer way to go into business for yourself. The general consensus being that buying a business involves less risk as its market is already established and its profitability (or potential profitability) can be considered in advance.
As we all know acquiring an established business does not guarantee success. Only last week, Woolworths admitted defeat with the Masters DIY business, which was acquired as an established brand and presumably after consideration of its profitability. Continued success is by no means bolted on.
When buying a business there are some factors that will improve your chance of success.
Start by identifying the type of business that you intend to acquire. It is often said that buying a business that relates to something about which you are passionate will increase success. I have a slightly different view of this.
In my experience, many people attempt to turn their hobbies and personal interests into businesses that subsequently fail. Just because you like doing something and are possibly good at it, doesn’t mean you can make the successful transition into providing that service or product.
For me, the key test is whether what that business does is something you can become interested in rather than whether it currently reflects your life’s passion. Personally, I am very enthusiastic about scuba diving nevertheless, I would not wish to own and run a dive shop. I prefer separate my leisure activities from my business motivations. By doing so, I can look at the performance of the business objectively rather than through any rose tinting that arises because I simply like something.
For that reason pick a business that you can see yourself running, not necessarily something that is associated with an activity that you already do. Look at how easy the skills for that business will be to learn and try to identify existing transferable skills that make exist. I know many business owners who operate successful businesses that have little to do with their leisure pursuits or previous experience.
When considering which business to buy look for an established small business with verifiable financial records and tax returns. Confidence in the financial performance is a priority.
Businesses with strong financials, a good customer base, modern equipment, well-trained employees and either a history of growth or the potential for growth are excellent business opportunities.
In Australia last year there over 2,100,000 small business entities. Throw into the equation that there is an ageing population which means many business owners are looking to sell as the exit strategy. This leaves a large pool from which to find a business that meets your requirements.
If you think that buying a business is an option, you then start by reviewing the websites of various business brokers and deciding what types of business you are interested in. Speak to an experienced business broker and consider retaining their services as an agent to identify potential business options.
The downside of buying a business is of course that you will have to pay for it. The more immediate the profitability, the higher the value. If a business is profitable, then this also makes it difficult for a new owner to change without endangering its continued success.
Buying a business is not necessarily better or worse than starting one up. There are pros and cons with both.
In the current climate when the media is a buzz with exciting new business models and catchy terms, I feel that acquiring an established business and growing it, is still an attractive proposition for those wanting to be in business for themselves and should not be ruled out.
Final question, how many toppings is too many? I know it depends on the toppings.