Why is it worth thinking 100 times before starting a new business from scratch?

The sad ending of the story of a man named Will P. (his real name was changed to preserve the confidentiality of the client) happened when he received an eviction notice from a building he had rented for his seemingly inevitably successful new restaurant a year previously.

He had a chain of restaurants in Russia, so Will was confident that he would be able to achieve success in the United States.

The area he rented was 900 square meters that cost him $30,000 a year. But this didn`t frighten Will because he knew the principles of the work in restaurants (although in Russia).

Going back a bit in this story, you can see that Will had the first signs of problems during the first month of work in the U.S. The restaurant couldn`t start operating at full capacity because the issuance of a liquor license takes several months. However, at the same time, rent and all other expenses must be paid in full.

Problems also arose with the staff. Soon the cook left because there were absolutely no customers, so there was no revenue either. Then the bartender left. And this cascade of staff exits continued until the closing of the restaurant.

Having suffered a little from the lack of a liquor license, Will finally got down to work four months after the beginning of the lease, spending about $200,000, even though the restaurant was originally equipped with everything he needed.

But a new problem emerged. No customers wanted to patronize his restaurant. Then Will hired a marketing company that pledged to bring new clients. Will paid $100,000 for their work, with all the marketing company did for that money was send out invitation cards. Customers began to come in little by little, but this was not the success that Will was counting on for his business.

When the mailing was over, even these customers stopped coming. As a result, the restaurant closed a year later, and the losses amounted to about a million dollars. So, Will's attempts to save money (not to buy a ready-made business, but to open a new business) cost him very dearly and didn`t bring the desired successful results. 

It is important to say that Vasily would have had the opportunity to achieve success in the restaurant business if he had acquired a ready-made business. Read the success story when buying a restaurant in our article.

What expenses should be considered when starting a business from scratch?

Premises. If the business depends on location, this is bad news. Usually, those who start a new business are left with scraps. It is impossible to open a new restaurant on a busy street without having several similar restaurants nearby in the United States. Most likely, you will open it and customers unfamiliar with your business will not come in. Accordingly, the profit will be low or nonexistant.

Client base. When a person starts a business from scratch, he has zero clients. If he is lucky and customers can be attracted through marketing, which is not a given, building a base will require many years of investment in advertising, and the business will be unprofitable all this time. Losses and advertising costs can be added to the cost of starting a business. When buying a ready-made company, you will have a ready-made client base; that is, you will most likely not work at a loss. Moreover, when buying an established company, most likely, marketing will already be set up.

Finding quality employees for a business that is not already thriving (no profit, no customers) is very difficult. Only those who could not find a job elsewhere will willingly take a position there. This doesn`t improve the chances of a business becoming profitable any time soon in any way.

Equipment. If it is bought new, then large investments are required for its purchase and installation even in the absence of a client base and employees. Or you may buy a used device that will stop working faster than customers will start arriving. Moreover, if a person is poorly versed in the equipment, he can buy the wrong equipment.

When buying a ready-made business, a broker helps with all the details. Find out more about the role of a business broker in the process of buying a business here.

Сколько на самом деле стоит начать бизнес с нуля 3

The statistic say 80% of startups don't make it to the end of the year. If the locals, who ideally know the language, the methods of obtaining loans, the preferences of buyers, and the industries themselves don`t have an easy time, then what kind of chance can newcomers have?

A startup is most likely too expensive a pleasure for you to afford. Don't fall into the illusive trap that your barrier to life in the U.S. will drop if you start your business from scratch instead of buying a ready-made one. If the startup survives, it will remain small, at best no profit, and this will make it impossible for you to file an immigration petition based on this business.

Often people refuse to buy a ready-made case because of the complexity of the search process. In our article, you can learn how to find a really good business and not make mistakes.

A reasonable alternative to a startup might be to buy an existing business. Learn how to find such a business and get a green card in a master class series.

In this course you will learn:

  • all the subtleties of business immigration;
  • how to find a ready-made profitable business that will be suitable for immigration;
  • what are the main criteria to check the business in order not to lose your money;
  • how should a business be valued?
  • what documents are required to close the transaction.

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