Why Share of Ownership in an Existing Business is Preferable - A Research Paper Example

From a general perspective, sharing of ownership in an existing business is considered overly lucrative as compared to starting a new business. However, when most people think of venturing into a business, they think of starting a business, they think of building it from scratch. This may involve developing ones own novel ideas as well as building the business from the ground up, which in the end may bring about the feeling of actual achievement. Nonetheless, having to start a business from scratch presents numerous disadvantages which definitely have adverse effects on the success of the business. For instance, some of the most severe adversities that a person may face are such as, the difficulty of building a customer base, establishing cash flow, hiring and maintenance of employees, marketing the new business, just to mention.

In my opinion, a share of ownership in an already existing business has lesser business risks when compared to starting a new business. Although some entrepreneurs may think that starting a business from scratch is cheaper and therefore less risky, I believe that risk is relative and partnering in an already existing business may simplify the chances of numerous kinds of risks. More specifically, when you partner in the ownership of an existing business, you take over or rather become a part of an operation that is already generating profits and cash flows. Besides, you get the advantage of having a well-established customer base, a good reputation as well as the benefit of having employees who are well familiar with all the aspects of running the business (The Entrepreneur, 2015).

Similarly, I prefer sharing of ownership in an already existing business due to the established network of contacts. In my opinion, although starting a business from scratch may be less expensive as compared to a partnership of an existing one, I still believe that the latter has well-established network contacts, hence making it more advantageous. Besides, with an already existing business, it is easier to channel a whole lot of time and energy that is involved in starting a new business towards establishing networks of contacts. According Greene (2011) robust marketing contacts and good suppliers are valuable assets in any business. This being said, partnering with an existing business is therefore beneficial, owing to the fact that other partners such as money lenders, suppliers, as well as marketing companies have a higher possibility of offering favorable terms to a business that has been around for some time, as compared to a new one.

In a similar regard, the idea of sharing the ownership of business with a partner or partners is overly advantageous as compared to building one individually. Particularly, partnership in business lessens the burden of running the business. This involves sharing in costs, time, energy, and many other loads that one is under as a sole proprietor of the business. Additionally, a majority of business and entrepreneurship scholars contend that sharing the ownership of the business, whether big or small has a whole lot of tax benefits (Grossmann, Katz & Keup, 2017). According to the National Centre for Employee Ownership, there are specific employee ownership structures that qualify for tax benefits. Particularly, being in a business partnership with people who have already had experience running the same business is also overly beneficial due to the combination of complementary skills from more than one person. This, in essence, implies that the business will have a wider pool of knowledge, contacts, skills as well as expertise, making it less prone to risks of losses and lack of skilled expertise, as compared to running a business solely.

References

The Entrepreneur. (2015, January 15). Should You Start a Business From Scratch or Buy an Existing Business? Retrieved from https://www.entrepreneur.com/article/240606

Greene, C. L. (2011). Entrepreneurship: Ideas in action. Cincinnati: South-Western Educational Pub.

Grossmann, R., Katz, M. J., & Keup, E. J. (2017). Franchise bible: How to buy a franchise or franchise your own business (4th ed.). New York, NY: Oasis Press/PSI Research.