Buying an established business rather than setting up a new business has many advantages. It is generally considered less risky than starting your own business, especially if you can buy a well- managed, profitable business for the right price. Here are five advantages of buying an existing business.
- Established brand.
An existing business is already established and has a name in the industry. This can save you a lot of time when dealing with vendors and suppliers and you already have an existing customer base. They are basically “turn-key” businesses.
- Established network of contacts.
Existing businesses also have existing business relationships with suppliers, vendors and other area resources. You have supplies, products and, usually, a full staff of already trained employees. In addition, like money lenders, suppliers and marketing companies are more likely to offer favorable terms to a business that has been around for a while.
- Less risk.
Any time you start a new business from scratch, you are unsure as to whether or not your venture will be a success. When you buy an existing business with a proven track record, you know what you are getting and you already know that it works.
- Easier to secure finances.
Most lenders are more inclined to lend money for the purchase of an established business rather than supporting an unknown start-up. There is less risk involved in financing a business that has already proven it is able to generate an income.
- Income from day one.
Most new businesses go through an initial phase when they do not generate an income – for some, this can be three years or more. Without finance in place or an alternative income, this stage can be tricky for new business owners and it is easy to become demotivated.
In contrast, taking over an established business means the ice is broken and you are confident that the business will be able to pay its bills and to turn a profit. The business practices have been streamlined and with existing employees who know the ropes, it won’t be necessary to work around the clock!