How Should Underrepresented Community Members Acquire & Build Wealth?

Acquiring wealth has always been a huge challenge for the majority of underrepresented groups of people. One school of thought advocates for getting into startups, but time has proven that financial institutions don’t fund startups and investors don’t usually know them enough to invest in them. another school of thought advocates for acquiring businesses that have an existing track record for example.

Starting a new business from scratch can be daunting, but so can buying an existing business. Both options have their pros and cons, and it’s important to weigh them carefully before making a decision. Let’s take a look at the advantages and disadvantages of buying an existing business.

Pros of buying a business:

Track record: When you buy an existing business, you’re buying a proven track record. You can see the company’s financial statements and business history to get an idea of how successful it has been in the past.

Income: An established business is likely to have an existing customer base, which means immediate income for the new owner.

Financing: It may be easier to obtain financing for an existing business than for a new one since the company already has a track record of success.

Vendor assistance: Established businesses often have established relationships with vendors and suppliers, which can be invaluable when it comes to negotiating deals.

Market knowledge: An existing business likely has a good understanding of its target market, which can be a major asset when it comes to marketing and sales.

Cons of buying a business:

Poor fit in terms of organizational culture, location, and team: An existing business may not be a good fit for the new owner in terms of its organizational culture, location, or team. It’s important to thoroughly research these factors before making a purchase. During the due diligence process, an accomplished legal team should take care of any factors that may negatively impact the business after the acquisition.

Vision conflict: It may be harder to impose your vision on a company that already has its own culture and history. Some existing businesses may resist change, making it difficult for new owner to implement their own ideas. It’s advisable to get a deep understanding of the strengths, weaknesses, opportunities, and threats of the business before making any major changes.

If you enjoy working in a structured environment and don’t want to reinvent the wheel, buying an existing business may be the right choice for you. However, if you prefer a more entrepreneurial environment where you can create your own rules and processes, starting your own business may be the way to go.

What is the best way forward?then?

When considering these options from the perspective of an underrepresented person, the odds of success may be stacked against them due to factors such as lack of access to financing, limited networks, and discrimination. However, with the right support and resources, it’s still possible to achieve success in either path. It’s important to do your research, seek out mentorship and guidance, and believe in your ability to succeed.

Identify an industry you would like to set up a business and get a job in the same industry. Learn about the ins and out of the industry, and what existing businesses are getting wrong or right. As you do this, you should be building some capital as well. Keep your credit rating healthy, and at the right time, identify a business you are likely to acquire in that industry. Why not start a new business? This process can be crazier. Imagine having to establish a business model, build the right products/services, and find the right customers; it is not for every one of us.

For established professionals, acquiring an existing business in their industry is the most guaranteed option. When an underrepresented professional makes an informed and intentional decision to acquire their own business, challenges associated with access to financial services like loans, grants, and investments substantially reduce because the business being acquired usually has its own assets, market share, goodwill, established business processes, products, and services that have a history of satisfying a specific market segment. An existing business reduces the risk associated with an underrepresented professional trying to acquire or start a new business.

In summary, both starting a new business and buying an existing business have their pros and cons, and it’s important to carefully weigh them before making a decision. When considering the option to buy, it’s crucial to thoroughly research the organizational culture, location, and team of the existing business. Additionally, it’s essential to seek out mentorship and guidance, especially if you come from an underrepresented community. With the right support, resources, and mindset, you can achieve success in either path.