Buying a Business or Starting One??

Trust me loyal readers, I do plan on talking a little about brewing in this "brewing4business" blog. Up until now, I've had a hard time relating things I've been thinking and talking about (franchising, etc.) to the micro-brewing industry here in North Carolina.

Most micro-breweries in North Carolina are independently owned and operated. None are franchised, though there are some restaurants with very small brewing systems in them that have been franchised small-scale throughout the Southeast. Interestingly enough, Ham's Restaurant contains a brewery at its Greenville, NC location but nowhere else. Also interesting, the Greenville Ham's beer is the best on the Eastern side of the state. Next time you're in Greenville...

All of that said, it's a fun (but not practical) thought experiment to consider what it would be like if I had the money to purchase one of these breweries.

Advantages to buying: First, this purchase would forgo the start-up phase (a very risky and failure-prone time). Second, this brewery would be known and hopefully well-established in the market area. If (as a natural entrepreneur) I was able to seize a well-known brand and combine that with a new business idea that the original owners could not or did not want to see, I could grow the business and everything would be peachy. Third, this brewery may have some tangible goodwill that a little digging could discover and turn to my advantage. More on that in another blog.

After some thought, the disadvantages to buying a brewery become disconcertingly apparent, confirming my suspicions as to why I don't see much buying of breweries in North Carolina. First, these things are incredibly expensive to purchase. Only the super-wealthy could ever afford one, even with financing. After that hurdle, there is the investigation into liens and hidden troubles that a brewery could have involved itself in. Whereas starting a new business is risky, the risk is redoubled upon purchasing an existing business. Who knows where debts and loans could pop-up?

Of course, there is more than one way to buy a business. Buying a business's assets will allay some of the risk over hidden liabilities and out-standing liens, judgments, and the like. If you cannot acquire certain assets piecemeal, a going concern purchase (where a business remains virtually the same but acquires new ownership), will help purchase a business more economically though this does not allay the risk of those hidden legal/financial/personnel troubles. I don't think either of these methods is preferable one to another. It all depends on the comfort level of the buyer and seller, the amount of planning that the buyer is willing to do, and the industry in concern (I think that a micro-brewery's method of choice is through the going concern--more on that to come as well).

This underscores the vital need for planning when purchasing any business. People may overlook it, but writing a business plan IS JUST AS IMPORTANT in a business purchase as it is in starting a new venture. The irony here is this: If you've got to do just as much planning to purchase a business then to start one--why not just be a "real" entrepreneur and start one from scratch?