Owen
Buying a business is one step in entering entrepreneurship. Most people want to buy a small business or instantly buy a franchise. These are options to start a new business with less risks. Many successful business owners have bought existing businesses, and they all succeed.
Great reasons to buy an existing business
Advantages of an existing business
An existing business is faster to get into. Starting a new business takes more time before you can gain customers. It takes time for some factors when starting a new business, such as:
- assembling the right team
- becoming known
- building your distribution channel
- finding a location
- securing your first contracts
- sales take time
When buying an already-operating business, you can have cash flow from the first day of ownership. It helps save you time and work with the capital to spend to get things from starting a new business.
With the financial history of the business
An existing business gives you an idea of its financial history. It is invaluable when having historical numbers of the existing company, as it helps you understand and plan by the time of the turnover. Planning and budgeting become easier now, and it is more accurate in getting informed of revenues and costs. You have an idea about these factors rather than trying to predict what entirely goes with a new business.
Sometimes, it is easier when you see all these areas in a business:
- cost to deduct in making a profit
- what products and services sell the best
- what business areas are most profitable
All these areas are important, and these are all transparent in an existing business.
Existing customers and clients
Yes, an existing business has clients and customers who are aware of the business. You cannot exchange any price with an existing customer, as they value it more. When you have them in your business now, there’s a chance of becoming their customer even if you are the new owner. One can argue that it is true when buying the right franchise.
A startup business is not sure if anyone buys what you sell. How worthy to have an income from day one and enough of an existing business that keeps phone ringing and doors stayed open for coming customers. You not only have customers, but you also have people who tell you what they like and do not like about the business and the products. You do not only have customers who tell you what they like and do not like about the products and services, including the customer service.
All these are valuable when plotting future improvement.
Staff of trained employees
Buying a small business with trained employees, as they know what to do on their jobs. It is hard to value an experienced workforce that understands how the business will function. Hiring and training new employees takes time and money before they perform the jobs they have never performed before.
Conclusion
Startups often underestimate the time and cost to take. Existing employees in the business you are buying have intimate knowledge of their jobs, making you save time and money. These people have ideas on making things better than you, as the first owner. So, you must listen to them.
