The Advantages of Buying An Existing Business
Why buy an established business rather than start from scratch? There are many advantages for the entrepreneur.
First of all, there is a savings in time, energy, and money when buying an existing business. The lengthy process of researching and creating business plans and models has already been done for you. Also, if there is financing needed for your purchase, it is not as difficult to obtain since a lenders are more likely to finance a business with a proven track record.
Also, most times, everything is included in the purchase, especially in turnkey or a franchise. It is very beneficial for you to inherit the infrastructure that has already been established by the previous owner(s). This not only includes the customers, but suppliers, employees, equipment, and systems as well. It is a good possibility that the previous owner(s) may offer some insight and assistance, therefore making the transition easier.
In addition, the cash flow most likely will start immediately, rather than in an unknown timeframe when starting a brand new business. Profitability is not in question as it would be in a startup. An existing business is probably producing a decent income and also has a solid client base established, therefore maximizing the chances of success by the new owner(s). There are many types of businesses for sale such as restaurants for sale, salons and retail establishments in which you can get a good idea of how well the business is doing in part by the traffic patterns. Speaking with the current owners as well as customers can also help you give you insight into the well-being of the business before you make your purchase.
Even though the business is already established, there is still room for innovation and creativity. It is beneficial of course for you to purchase a business in which you can bring something to the table as far as experience and expertise, whether it is from your own job experience or skills you’ve gained through a hobby. If you’ve never owned or managed a business before, it is especially important that you at least have some knowledge of the type of business that you are purchasing. For example, if you’ve been a stylist in a beauty salon for many years, it is likely that you will be successful taking over an established salon.
Finally, since the business already has a good foundation, you can focus much of your efforts on building and expanding the business. As you become more familiar with your customers’ needs and wants, you will have opportunities to add enhancements and improvements, therefore increasing your chances of higher profitability much sooner than you would in a startup business.