Auto news on Youtube Jan 21 2019

Welcome to The Website Investor, I'm Jeff Hunt,

and today we're going to talk about when it's better to buy than to build.

Now, you know that I have a bias towards buying,

I mean this show is called The Website Investor,

we like to buy but there are also times when you want to build. ln

this session, we're going to talk about buying not building

and the advantages of buying

but first you should know that the obvious qualification

to be able to buy is that you have capital,

you have some savings or you have access to funds in some

way and so if you have no access to funds then

you can't buy and you're stuck in the building route.

If you do have access to buy,

to funds that will help you to buy,

then stick with it because there are some really good reasons

and situations when you would want to buy

and not build. And the first one is that when you buy

something it has some size

and scale that allows you to leverage your time;

so any investment that you make after you buy

ends up being, resulting in,

bigger returns on investment than you would make when you build something from scratch.

Let me just give you an example: let's say that you spend a day

optimizing the pricing of a product that you're selling

after you buy a website,

well, that day that you invest in optimizing pricing

when you already have a lot of customers,

when you already have sales, is very likely to result in

a much bigger profit

and gain than if you spent a day when you were building something

from scratch - you had no customers and so the

actual realization of any benefit

and exchange for the time that you spend is very small when

you're starting with nothing than if you're saying

with something significant.

So there's more leverage of leveraging the basis

of your investment. Just like when you have a house,

you know, you buy a big house

and you get a mortgage for the house

and when the value of the house goes up

you're kind of leveraging the banks

and money and you're taking advantage of the incremental

growth from having a bigger house,

right? Than if you just bought a smaller one

with your own money. You're using the mortgage so you're kind of leveraging that larger

basis. So that's a reason to buy because

you can work with a larger base,

fundamentally.

A second reason to buy is when you want faster profits,

right? When you become the owner of a new website day

one of ownership you have some net income coming in.

You have the same net income that was coming in the day before you bought the site

and so your road to profits

and your road to value is a lot faster than if you start something from

scratch;

it may be months,

years before you see any appreciable revenue when you're

starting from scratch.

So a second reason to buy is it's a lot faster.

Third reason is it's easier.

You may actually not have any

interests at all in doing those technical tasks,

design tasks, the product development tasks,

whatever those tasks might be for starting

an online business from scratch whereas when you buy a business

a lot of those things are already done.

Yeah you may need to tweak them,

yes you may need to learn something about them,

you may need to improve some things

and what you buy might have significant flaws

but its way ahead of starting from scratch

where you have actually absolutely nothing

and you're having to do all of those things from the very get go.

So it's faster it's a little easier

and more efficient, you can focus your efforts

and energies on particular needs of the business rather

than on all of the needs of building it from scratch.

Now another area of reason rather why

buying can be better than building,

and some people disagree

with me on this one, is that I feel like it's actually less risky

to buy than to build and here's what I mean by that -

when you buy a business you're buying something that's already working,

it already has a process,

has a product or service of some kind,

it has traffic, has revenue

and so all of the pieces are working

or you wouldn't buy it, and that is what you're buying you're that working

model, that income stream, that comes from something that's already working.

And so there's like a thousand businesses that failed

and didn't reach the point that this one reached that you're going to buy;

so you've sort of eliminated alot of the risk by focusing on

something that's working, whereas when you start from scratch

you don't really know for certain that you'll ever have your first

dollar of income, that you'll ever have your first customer,

I mean chances are if you're following the right system you will

but still there's a lot of risk inherent in starting

something from scratch and we're not just talking about online businesses as

you know statistically that applies to brick

and mortar businesses very much so.

So, there's another way to kind of think about this risk

difference between buying and building is that when

you're buying a website the risk

is more about your evaluation,

your analysis,

of the property that you're buying than anything else.

So its like,

you know, your mitigation of risk has

to do with how well you evaluate the prospects of that business

and then how prepared you are to kind of take over ownership

and run the business.

But when you build there are more elements of risk involved;

there's like market selection,

there's the process

and system you used to build that's risky

as well and then your ability to build a good thing

is a risk element and then really important

when you're starting from scratch is,

sort of, the risk of your own personal discipline

and perseverance and sticking

with it to make it come to fruition.

So there's kind of two different kinds of risk.

When you buy, of course you're risking some capital

but here the risk is sort of hinging on your

evaluation of the business that you're buying and then when you build the

risk is spread over more things - its over you're

getting the right market and you're going to build the right thing

with the right process and are you committed enough to it.

So, I personally believe that in

many cases buying is less risky than building.

So those are some of the reasons why you

would want to buy and not build and that's what I've got for you today

in this session. There's another session where I talk about when

are the situations where it might be better to actually build

and buy and there are some very legitimate reasons for doing that as

well. Visit us at www.flipminds.com/today for

resources and tools for your business. And I'll see you next time.