
Don’t do Startups, Buy a Business..? - transburgh
http://www.college-startup.com/entrepreneur/dont-do-startups-buy-a-business/
======
josefresco
Being a startup focused web geek I'm constantly bouncing ideas off of my
hacker friends. One of which always responds with statements like "It would be
cheaper and a better investment to just buy a Quiznos franchise" or something
along those lines.

Now he contends mostly that he's looking for free lunch more than anything (oh
he's a funny one), but often buying a traditional boring old business makes
much more sense than tying to hit the VC tech lottery.

Screw logic though, onward towards beta 2!

~~~
nostrademons
The big advantage of web startups is that they can be done with no capital,
which makes them attractive for people who have no capital. If you finance a
business purchase, you have to a.) qualify for the loan and b.) earn over and
above the cost of capital to turn a profit. That can be a risky bet,
particularly if you have no operating experience.

Private businesses can be very attractive if you do have the capital, though.
They often give much better returns than publicly-traded companies, because
the seller gets something in return (liquidity) that public shareholders
already have. If I had a spare $10M or so to throw around, this is definitely
one place I'd look to park it.

~~~
josefresco
No capital assumes you are doing everything 100% by yourself which is
unlikely. Even if you assume you have 3 partners each 'donating' their time
for a piece of the action, the 4 of you could probably secure a commercial
loan and start a traditional business with a greater chance of success.

Also, because I sell my time, I never consider it free.

~~~
nostrademons
What's so unlikely about doing everything 100% by yourself (at least for an
initial prototype...you can bring in other people after you have some
indication that it'll work)? Many - perhaps most - of the successful tech
products you've heard of were developed that way.

Your point about time not being free is well-taken, but the original context
of this post is people in college or just out of college. Their time is very
likely undervalued by many of the jobs they would otherwise be working at, so
they can get a better return on it by working for themselves.

