To Build or To Buy – Open New Coffee Business or Buy Existing Business

There are a number of options that are available when starting a business enterprise. One can choose to purchase and existing business or start a new investment. According to (Graham, n.d.) the American coffee market is one the rise and shows no sign of decline in the near future. This provides source of motivation for new entrepreneurs who would wish to invest in coffee shop in the country.

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However, the choice remains whether to start from scratch as outlined on by the paper or buy an already existing business. Both strategies have their own merits and demerits. For instance, buying an existing business can be expensive because in addition to the capital outlay, an additional good will often is demanded by the owner. On the other hand existing business absolves the new owner with the need to undertake new market research and marketing.

            In consideration of the coffee shop business in the country, the paper finds it useful to open new business rather than buy an existing coffee shop business. The rationale behind the option is based on less investments required starting new business as opposed on buying an already established coffee business. In addition, opening new coffee business offers the chance to exploit the increasing demand for coffee and ability to connect with new consumers and the community as a whole. Developing a new brand of coffee can spur unprecedented growth and expansion that could lead to the business developing many outlets in other markets.

            Moreover, opening new coffee shop offers advantage of choice of a desired location as opposed to buying an existing coffee shop. The existing coffee shop might be in a location which is not favorable to the target customer base.  Also, the opening of new coffee shop can provide the opportunity of knowing new market trends and other market information when the market research is conducted.

            Similarly, the opening of a new coffee shop could be a better option that buying an existing coffee business because offers an opportunity of introducing new brand of specialty coffee that can accommodate the changing consumer needs and preferences. The consumer needs and preferences are often changing, which demands that existing market entrant in the coffee industry to be innovative. In addition, sometimes the consumers need just products offered in new a location that is convenient to them. This creates an opportunity to try new ideas and experience on opening other more stores in future.

            The other rationale behind starting the new business over buying an already established coffee shop is the amount of capital required. Starting a coffee shop is relatively cheaper, requiring only less capital compared to buying an established coffee shop. According to (Graham, n.d.) an established coffee shop with over 300 customers on a daily basis has a gross monthly sales of over $20, 000 and net monthly net profit of about $4000. This represents a good business considering it requires less capital to start a coffee shop. However, if one chooses to buy such an established business, one is expected to meet the costs of capital goods and a substantial goodwill. Though it may seem good business, most of the capital goods may have depreciated requiring total overhaul. The extra money that would be invested in refurbishment and the good will can be enough to establish a new coffee business shop.

            Finally, purchasing an existing coffee shop business does not guarantee that the customer base that exist with the business will stay after the change of ownership. Starting a new coffee shop provides an opportunity of attracting and retaining new customer base. It also offers the opportunity of creating customized marketing strategies that meets the new customer needs and preferences, which often change with time. In addition, coffee business is ever growing making starting of a new business a prospect of growth over time with the minimal initial capital and less risk.

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