The clear alternative to setting up your own business start-up is to invest in the purchase of an existing business. Year upon year, tens of thousands of businesses are bought and sold, and with this blurb we look to explore the advantages that buying an established business brand can bring to the shrewd entrepreneur.
Why Consider The Purchase Of An Existing Business?
1. No Start-Up Woes. Most experienced startup entrepreneurs might just tell you that the snuggly concept of creating your own corporate beast from scratch is a little more romantic than the reality. Managing an established business is tricky enough, but creating a brand new corporate being from scratch brings a platter of stark challenges. A business plan must be formulated, with irrefutable proof that the projected numbers have a reasoned basis behind them. Without it, there’s little chance of courting sufficient funding to get the company off to a running start. Then there is the tricky little process of creating a whole new operations plan that can convert raw materials into finished goods. Employees will often need to be hired – hopefully there wont be too many lemons amongst them or you’ll be winding up doing a lot of the nuts and bolts basics yourself. Then, assuming you have any energy left, you’ll have to march into a fiercely competitive market and bring home some clients. All of this requires hard work, dedication and funding before so much as a penny plops into the till.
2. When You Purchase A Business, You’re Purchasing A Proven Business Ecosystem. Assuming you’ve done your due diligence, when buying a ready made business you’re buying something that is already deft at converting raw materials into final output at a profit. It means you’re going to be buying the assets that you would have needed to purchase in any event, and will probably have a team of employees who follow an established and seasoned set of procedures and operations.
3. It’s Less Risky To Purchase An Existing Profitable Business. When you purchase a fully functioning business that is already chugging out profits year on year, you’re much less at risk of business failure than setting something up from scratch by yourself. A ready made business will have an existing order book and a client base that can be readily tapped into. Business branding can be sinfully expensive, so buying into a developed brand significantly improves your odds of business success.
4. The Opportunity To Take Something Good & Make It Better. Some pro’s who buy businesses for a living are able to take a fundamentally good business, and simply improve on it. Some businesses are run by owners who, while having got the business to a profitable level, aren’t quite deft enough to scale it to potential. This is where the right buyer can make off like a bandit – the right tweaks to the right business purchase can help create an explosively successful business.
5. Negate Cashflow Issues. One of the most menacingly potent causes of startup business failure is poor cashflow. It’s near impossible to predict cashflows accurately for a completely new business. Mostly, this difficulty is born out of the fact that there is no trading history on the basis on which to spout even the most vaguely accurate projections. Invariable, those startups who underestimate costs and overestimate revenues will end up feeling the sting of bankruptcy. When you purchase an existing business, you negate the likelihood of cashflow tripping you up. An established business will have an existing track record, with clear debtors, creditors and predictable income streams that may be used to control and project cashflow.