Buying an existing business is like running a marathon which has already been half-run for you by another athlete!
Starting a business can be a difficult and risky endeavour. However buying an established business can provide the new owner with a much more secure and viable option.
The key reasons for buying an existing enterprise as opposed from starting from scratch are;
Immediate Cash Flow
A business that is already operational will be generating cash flow from day one. Knowing that the business will be generating an income for paying off debt or fund future growth provides piece-of-mind. It allows buyers to keep their capital reserves intact whereas start-up are less certain.
It can take a long time to launch a new business especially when it comes to setting up the necessary infrastructure, systems and processes. By purchasing an existing business you may skip this phase and get straight to running and growing the business.
Purchasing an existing business lowers the risks associated with a start-up venture. An existing company will have a track record of success that can be used to forecast future results. Furthermore an existing business will have well established systems and process in place, ensuring a smooth transition for the new owner.
Similar to saving time, an established business saves you money as it already has the equipment, stock, staff and processes in place. An existing business can save you the cost of setting up all the infrastructure required to operate the business. An existing business may have already negotiated bulk supply agreements which help save on future costs.
Access to IP, Industry Knowledge and Expertise
When you buy an established business, you gain access to the current owner’s staff, industry knowledge, intellectual property and expertise. This can be extremely important because it can help you make better decisions, avoid common mistakes and help grow your business more effectively.
An established business will typically have existing relationships with customers and suppliers, which can save you time and money developing these relations from scratch. These connections can also be used to negotiate better prices, terms, delivery dates and conditions.
A major benefit of purchasing a business is that it frequently comes with an experienced and knowledgeable team. The cost, time and stresses of building a team from the ground up can be immense. Additionally the current team may have valuable industry knowledge and relationships that can assist you in expanding the business.
Easier to Obtain Finance
It is easier to obtain finance for established businesses as lenders will have a better understanding of the business’s performance and the future potential of the business. A well-established company will have a track record of success that can be used to secure funding from banks, investors, or other lenders.
Established businesses come with brand recognition which has been created over time. A long trading history and a strong reputation enhances brand recognition. Successful businesses are likely to remain successful. The chances of succeeding and accelerating the growth of an existing business are much higher, over starting a business from scratch. There are a multitude of business for sale and on the market right now. Check some out.