Why Do Entrepreneurs Prefer to Start Companies Rather Than Buy Them?
Friday, December 19th, 2014
Would-be entrepreneurs favor starting their own businesses to taking over companies already in operation.
A 2012 telephone poll conducted in the 27 member states of the European Union and Brazil, China, Croatia, Iceland, India, Israel, Norway, Russia, Switzerland, Turkey, the United States, Japan and South Korea by TNS Custom Research asked a representative sample of adults: “If you currently had the means to start your own business, including sufficient funding, would you rather set up a new one or take over an existing one?” Fifty-six percent of Americans responded that they would prefer to “set up a new one,” while only 35 percent would prefer to “take over an existing business.”
The greater preference for starting a new company is consistent over time. A similar survey conducted in 2009 showed that 61 percent of Americans would rather set up a new business, while 30 percent would favor taking over an existing one. A 2007 poll found that 67 percent of Americans would prefer a start-up, while 27 percent would favor an acquisition.
The partiality for starting companies is widespread. In all 41 countries in which the 2012 survey was conducted, more respondents said they would prefer to set up a new business than would prefer to take over an existing one, though in Germany the gap was only one percentage point and in Austria it was only three.
Actual entry into entrepreneurship follows these predilections. When respondents who described themselves as being self-employed were asked how they got into business, 71 percent of Americans and 67 percent of Europeans said they started a business from scratch.
Why do you think people prefer starting a business to acquiring a business as a way to enter entrepreneurship? Is it because acquiring a small business tends to take more capital than creating a new one? Is it because people don’t know how to find the gems among existing small businesses for sale? Is it because people want to introduce a particular product or type of enterprise they think is missing in the marketplace? Or is it another reason entirely? I’d like to hear readers’ thoughts on this question.
Courtesy: Small Biz Trends
