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CCSK Blog Tip: Don’t Recreate the Wheel: New Businesses, Mobile Apps, & Expanding Operations


Don't recreate the wheel if you do not have to. There are times when you do not want to start a business from scratch because it will be more efficient and easier to invest into a business that is already running. For example, a non-profit may wish to begin under an incubator rather than run through the rigmarole of filing form 1023 to achieve 501(c)(3) status. If it is a business with excessive regulatory compliance or licensing requirements then it may be easier and cheaper to find a company ready to sell. If you are new to an industry or business then it can help to find a mentor who may be able to pass the business onto you. This mentor will have knowledge and most likely have some book of business or clients or customers already established. Sometimes all you have to do is just send out some information to those old clients or customers to jumpstart the business for yourself.

Let’s talk mobile apps. It can cost tens of thousands of dollars to create a mobile app. Perhaps you can find a currently existing app and purchase the code that can then be rebranded for your purposes. When trying to find an app such as this you should look at the functionality not the subject or content of the app. The app you purchase may have a target market or industry different then what you would like to target.

Instead of starting a new business, maybe you simply want to expand your current business to a new area. If that is the case, an acquisition could be best. You are not merely comparing just the start-up costs versus the acquisition but also the amount of time that you would have to invest in a new startup versus an existing business. Further your risk will likely be lower as well so long as the business you are acquiring doesn't have large debts or liabilities. So, at that point you could just do an asset purchase rather than an equity purchase. While you lose out on their goodwill, you may just need their equipment and other operations.

CCSK Law - Carr Chelovich Skadberg & Kazmierczak, LLC
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