There is always that debate about whether it’s better to buy a business over starting from scratch with a new business. We all know that with either of these it’s going to be difficult. Owning your own business is hard and comes with a lot of responsibility. However, if being a business owner in Tenerife, whether that’s owning a gym or a restaurant, is what your passion is then who’s to stop you?
If you aren’t too sure on the whole ‘buying a business’ or ‘starting a business from scratch’, we are here to help. We have divided up all the important factors such as cost, profit, ability, start up and business reputation into sections, talking about what’s better for each one, buying a business for sale or starting from scratch.
Cost
Let’s get straight into it, talking about the cost. When researching into this, it is said that in most cases buying a business that’s for sale can be a lot cheaper than trying to set a new business up. I fully understand if you want to set your own new business up from scratch, design it how you want but just keep reading and bear with me to explain the basics.
So let’s just think about it for a second. You are a massive foodie, always have been and always will. You love cooking and want to set up your own cafe in Tenerife even though you aren’t from there. However, you want to make the cafe your own design, with colours and patterns that you choose, as well as matching table and chairs. You’re then going to be thinking, “I’ll start from scratch. That’ll just be easier and then I can do what I want with it”. Yes, but also no. The issue is, as great an idea as that sounds, you’re just going to be making a lot more work for yourself, as well as spending lots more money. If you were to buy a cafe that is already trading, you’ll be able to start running your cafe straight away and then you can just change the wall colour and table sets overtime.
Profit
This is another big topic that you should definitely be considering. From buying a business that is already set up, this means from the first day of working you will already be earning. How much profit that will end up being, no one can say but it will most definitely be more than if you start from scratch. If you were to choose starting from scratch this means your first few months, maybe more could just be spent setting up and developing your ideas into a new business. This will mean spending money on paint, flooring, furnishings, appliances etc… with no return. This could lead to you not seeing a profit for the first few years of owning your business.
Another point is that depending how your first few years go as a business, it could reflect how your business will carry on over time. For instance, if you buy a business and start seeing profit from the start, it will probably just be onwards and upwards for you and your business, flourishing day by day. However, if you are to start from scratch, and it takes a few years for you to start seeing any profit, you might end up going bust if you don’t have enough money to keep afloat. This isn’t necessarily going to be the same for everyone. You might already have enough money behind you to be able to keep it up anyway, but it is definitely something you need to be aware of.
Ability
Moving on from the money side of it, let’s talk about ability. This can be different for each individual but overall, buying will be a lot easier. As I have said before, buying a business, in most cases, you inherit furniture and appliances with the business. This means there isn’t a huge amount for you to do once you get there, other than to meet the locals and get to know the regulars. By having the business ready for you, it allows you to be able to focus on making that business bigger and better than it already is and over time, who says you can’t add a few of your own touches to it.
If starting from fresh is the route you want to take, be prepared for it to be hard work. If you aren’t familiar with Tenerife, and you don’t speak fluent Spanish either, that’s going to make it much harder as well. Once you get out to Tenerife and start getting your business design underway, trying to book in painters, builders, electricians, plumbers and any other handy-people, if you aren’t fluent with the language, you may struggle with this. However, I’m not saying that just because you don’t speak fluent Spanish that you won’t be able to do this. If you can get through the language barrier and make it all work out then I do hope that your business does well and flourishes overtime.
Start Up
If you’ve never started your own business before, this can be very daunting, especially if you are choosing to start fresh. The reason for this is because if you’re buying a current business, as well as getting all the furniture and appliances that come with that business, you’re also getting all the licenses, contracts and paperwork that is already in place. So for example, if you want to open up a nightclub, if you were starting fresh you would need to get the licence to be able to actually serve alcohol, however if there is already a nightclub that you are buying, you will get the license with it (in the majority of cases). Hopefully when buying, you will also manage to keep some loyal staff members, rather than having to recruit a whole new team.
For someone that is starting a business from scratch, unfortunately you may not have all these things given to you. Most the time it is just an empty building and this means there is lots for you to think about such as if the walls need re-plastering and painting, if you want to remove the flooring for something new, if you need new electrics put in and where they are needed, if you need a toilet or kitchen fitted. You also need to then look into what furniture and appliances you need for your particular business as well as things to make it aesthetically pleasing, such as mirrors, pictures, flower pots etc… Then you need to consider what license and contract your business needs to be able to run, whilst meeting all the legislations and guidelines. The list goes on.
Business Reputation
Again with this point, it favours on the buying a business over starting fresh. This is because, when you buy a business in Tenerife, whether that is a restaurant, cafe, beauty salon or gym, there are going to be people that already know about that business. Yes the business might advertise that there are going to be new owners taking over, but if you are polite and welcoming to your new regulars and other locals as I’m sure they will be to you, everything will be fine sailing.
This also means that if that particular business already has a good reputation, as long as you are as polite as the previous owners, that reputation will carry on for you (hoping it's a good one of course). However, if that business has a good reputation and when you take over, you end up being disrespectful and rude to your customers, that reputation will change and would massively affect your business.
Overall, you can pretty much tell which one would be the cheapest, easiest and the quickest to set up and start and that is of course buying a business that already exists in Tenerife. I don’t doubt that some people can set up a new business from scratch and that the business will flourish, but this won’t happen overnight. There is still a lot that will come with it and it won’t be easy to do. Either way, you should just consider and research all the possibilities and outcomes for each option before making your final decision.