Benefits of Buying an existing Business

Some benefits to buying a new business are the following:

Everything is new and works

Customers like to go to a new business

The area may be under-served  

The value of the new business after you open may be greater than the cost of equipment

New and innovative ideas may be better executed

In addition, there have been numerous advantages in purchasing an existing business and these are as follows:

Buying an established business is less risky – as a buyer you already know the process or concept works. Financing a purchase is often easier than securing funding for a start-up business for that very reason—the business has a track record. A bank will be able to look at the historical results for the business, not just rely on projections.

You’re buying a brand name. The on-going benefits of any marketing or networking the prior owner has done will transfer to you. When you have an established name in the business community, it’s easier to place cold calls and attract new business than with an unproven start up. That’s an intangible benefit that’s difficult to put a price on.

With the acquisition of an existing business, you will also be buying an existing customer base and vendor base that took years to build. It’s very common for the seller to stay on and transition with the business for a short time to transfer those relationships to the buyer.

When you buy a business, you can start working right away and focus on improving and growing the business immediately. The seller has already laid the groundwork and taken care of the time-consuming, tedious start up work. Starting a new business means spending a lot of time and money on basic items like computers, telephones, furniture and policies that don’t directly generate cash flow.

In an acquisition, one of the most valuable and important assets you’re buying is the people. It took the seller time to find those employees, develop them and incorporate them into the company culture. With the right team in place, just about anything is possible and you will have an easier time implementing growth strategies. Plus, with trained people in place you will have more ample time to take vacation, spend time with family, or work on other business ventures. When start-up owners and independent contractors go on vacation, the business goes too.

Typically, a sale is structured so you can cover the debt service, take a reasonable salary, and have some left over to take the business to the next level. Start up owners, on the other hand, often “starve” at first.. Some experts say start-ups aren’t expected to make money for the first two-three years.