Why should you buy a business that already runs?
Why would you buy an existing business?
Starting a business on your own can be an exciting prospect but it involves many challenges from the difficulty of building a customer base, finding the right employees and establishing positive cash flow. Many entrepreneurs have found buying an existing business a better option for the following reasons:
Instant revenue – Make money immediately
Most new businesses do not generate profits or revenue straightaway and could take months to years before it does so, depending on the business. At the same time cash is going only one way- out. When you buy a profitable existing business you already know what to expect in terms of profits.
Established Infrastructure, Systems and Process
Getting operations organized internally in terms of infrastructure, systems and processes can be hugely time consuming and ironing out the glitches can take the energy out of you even before the business opens its doors. Buying an existing business means it is all in place already and you just need to understand how the present system operates.
Establishing your own brand is an uphill task as you face intense competition. With an existing business, they have a proven concept and the hard work is done putting you on the fast track to success.
Established Customer Base and Contacts
It takes years to build a loyal customer base and a good, reliable vendors base. When you buy a business, most sellers will stay with you during the transition period and guide you through the introductions.
There is a higher risk involved in starting from scratch as success can be evasive while success is already a given in the business that you are buying into. If you have conducted your due diligence right there will be no hidden risks and success is a high probability.
The success of a company relies heavily on a trained team of employees and that resource is available to you from day one if you buy an existing business.
Ability to focus on growth
Start-ups can burn through your energy and finances quite quickly in the initial stages itself leaving you depleted and unable to make that push to growth. With an existing business, the revenue coming in is constant and you can decide on how to reinvest to improve on the cash flow.
Buying an established business rather than setting up a new business has many advantages but it is not without risks. Do your “due diligence” and access your ability to run the business you are considering.