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James Davis
James Davis

One Advantage Of Buying An Existing Business Is


Create your own list of advantages and disadvantages for a business that is for sale and you are considering buying. Consider if this makes the business a good investment and include the list in your business plan if you proceed.




one advantage of buying an existing business is


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Talk to your family, friends and other business owners to seek advice. Discuss the advantages and disadvantages you have identified with local business networks, business advisers and industry experts.


Many people only consider starting a business from scratch but another viable option is to buy an established, existing business. The most important thing you can do is to consider all options before striking out on your own.


Okay, we agree that the startup business may be more exciting and potentially more rewarding (think IPO). So what are the advantages of purchasing an already established business? Here are a few things to consider:


Ultimately this decision is all about risk control. An existing business has inherent risk; but probably not as much as a startup if you perform your due diligence. Many buyers driven by emotion rush into a deal without adequate research into the proposed venture. To minimize risks, take all necessary precautions and don't rely on your personal judgment alone.


We certainly aren't trying to discourage your entrepreneurial adventure. For some people, starting a business from scratch is the only way to go. But if you're just in the "thinking about it" stage, you may want to consider purchasing an existing business first.


If you get it right, there can be many good reasons why buying an existing business could make good business sense. Remember though, that you will be taking on the legacy of the previous business owner, and you need to be aware of every aspect of the business you're about to buy.


If an agreement does not include these items or if you are starting a new business, expenses can add up quickly. The best way to ensure a smart investment is to consult an expert to help you through the buying process.


Buying a business may not sound as exciting as starting yours from scratch, but you can implement all the creative ideas you have. Buying an existing business can be as challenging and rewarding as starting your own.


If you want to be in business for yourself, there are two general ways for you to get started. You can start a business from scratch and do all the initial setup work yourself, or you can purchase an existing business that has already been established. All other factors being equal, buying an existing business provides several advantages over starting one from the ground up.


There is an immense amount of legwork involved with starting up a business and bringing it to the point of profitability. This typically requires several months or perhaps even a couple of years of working long hours and pounding the pavement to build the business largely through trial and error. When you purchase an existing business, this work has already been done for you. The business is likely already well established, and there should be plans and procedures in place that allow it to run more smoothly.


When you buy an existing business, you are inheriting its name and the goodwill within the community that comes with it. An established business has a reputation (hopefully a good one) that a new owner will be able to benefit from.


When you purchase an existing business, it has a financial history that you can draw from and gain a good idea of how it will perform in the future. While past performance is not a guarantee of future results, if a business has done well in the past, it is one good indicator that points to continued success going forward.


Closely related to the established brand and goodwill we talked about earlier, purchasing an existing business means having a built-in market and customers from which to build. And knowing your ideal customer is important because this gives you a better idea of who to market to expand your customer base.


One of the major challenges with buying an existing business is coming up with the capital to make the purchase. Most buyers will need some type of financing to complete the transaction, but hopefully you have some of your own money to put into it as well. At the end of the day, you need to be able to line up the financing, and the numbers need to work. If the math does not work, then this might not be the right option for you.


Buying an existing business is a great option for many aspiring entrepreneurs, allowing them to hit the ground running and jump right into profitability. But there are some cautions to be aware of as well, and it is always best for prospective buyers to work with a local business broker. A reputable CPA and accounting firm broker can help you find the business that is the best fit for you, and they can also help you successfully navigate the transaction.


When considering starting your own business, there are a lot of factors that come into play, some of which are good and some of which are bad. Regardless, only you can weigh out each and decide if buying a business is the route you want to go. Below outlines a few pros and cons when it comes to buying a business.


One advantage of buying vs. starting a business is that the business is already established and people know about it. There is likely already a loyal customer base. Marketing strategies may already be in place. This will all give you a leg up on growth potential when compared to starting a business from scratch where a lot of money could need to be invested in marketing the business and gaining attention.


There's nothing better than starting your dream from scratch and seeing it through to the end. Unlike when buying a business, right from the start, you get to build the foundation of your business how you want. You have a blank canvas that you get to paint with whatever color and using whatever tools you deem necessary. Sure, when buying a business, you can also change a lot of things, but that will take time and money (neither of which you may have).


In the end, which is the best decision for you? Whether starting a business or buying one, there are a lot of things to consider. Both can bring high risk, high costs and a high level of difficulty to succeed. It all comes down to a couple of key considerations.


The debate between starting a business vs. buying one does not have a right or wrong answer. It all comes down to your individual needs and situation. Take your time to ensure you make a decision based on all of the information you gathered. Never make a decision quickly or without looking at things from all angles.


And don't forget that you don't have to go it alone. Incfile is here to partner with you, whether you start a new business or purchase an existing one. Our tools and resources can guide you in the next step of your business journey.


In this article, we will explore the advantages and disadvantages of buying an existing business. These will vary depending on your skill set and the business you consider purchasing, and your success isn't guaranteed, but the failure rate of companies younger than five years is so high. You need to carefully weigh the pros and cons of buying an existing company.


Traditional bank loans typically have underwriting criteria related to time in business and debt service ratios that by their very nature require historical revenue. It is often easier for a business to get financing when it has a proven track record. Couple traditional bank financing, which often includes working capital, with some portion of seller financing, and a bank could help you buy an existing business with as little as a 10% down payment.


An established business will already have a database of customers, and as a new owner, you can turn your attention to establishing deeper relationships and further monetizing them. It's almost always cheaper to work with existing customers rather than acquiring new customers. At the same time, you can continue to advertise the business and grab new market share.


Part of the process of buying an existing business is doing your due diligence and your own financial forecasting and analysis. Determine what livable wages you need, and then make sure that the business has enough cash flow to support you and continue to fund operation, debt servicing and growth.


Unlike other brokerage firms, over half of Viking M&A Senior Advisors have been business owners. With a keen understanding of what it takes to both buy a business and to build a business from scratch, we have gathered the pros and cons to consider if you are thinking of buying a business vs. starting one.


What are you interested in or excited about? If you have a truly groundbreaking business idea that you are passionate about, starting a new business may actually be your only option. If the business you want to own does not yet exist, it may be up to you to start it. However, if you have skills, knowledge, or an interest that you care about, consider looking into businesses for sale in that industry to see if anything looks like a potential fit. Buying an existing business vs. starting your own is not a reflection of the amount of passion or interest you have, but rather a matter of where you can best put that passion to use.


How much capital do you have available? One benefit of starting your own business is you can try to craft it according to your available capital. Buying an existing business is almost always more costly upfront than starting your own. However, it is also easier to get financing for buying a business vs starting one. Lenders and investors are much more comfortable working with a business that has a proven track record. Which brings us to the topic of cash flow. Simply put, an existing business will have it, and a startup will not. Startups require an upfront investment with no initial return. Consider how long it may take to break even and how you will continue to fund the business (and support yourself) until it becomes profitable. On the other hand, a business worth buying will have existing cash flow that will free you up to focus on growing the business rather than just staying afloat. 041b061a72


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