WHY BUY A BUSINESS?
Why should I buy a business rather than just start one up?
It can take you twice as long and cost twice as much to start a business up from scratch. Buying someone else’s business provides excellent benefits including:
- Immediate cash flow – In many cases you will be getting paid right after closing or within 30 days if customers are invoiced. Generate an income from day 1 with customers that will be buying from you right away.
- Access to credit – Many banks are more comfortable lending to an existing business than to a start-up.
- Known market position – You will be buying a business that has proved its value and place in the market. You will know that people value the businesses products and services.
- Working systems – Don’t underestimate the value of a working system. Some new business owners struggle for years perfecting their operating systems. You may be able to improve it, but at least there will be a process you can adopt from day one including: mechanical, computer and administrative systems.
- Trained staff – It can take months or years to find and train even one employee. There is, possibly, an unrealistic fear from buyers that staff will abandon them after they purchase. The reality is that employees often respond with enthusiasm to a new owner’s arrival. They may be eager to tell a new owner their ideas for improvement that were perhaps ignored by a previous owner that was “stuck in his or her ways”. Good staff may see a new owner as an exciting opportunity for a fresh start and growth.
- Seller assistance – Rarely will the previous owner wish to just walk away. Many owners have their entire working life wrapped up in the business they have sold to you. They will be there to ensure that the business continues as a matter of pride, and will be a fountain of wisdom and advice (even though you may reject some of it). They will know the answers to questions you forgot to ask during the due diligence period, as well as ones you would only formulate after years of starting and running a start up. Utilize the former owner. It will be to your distinct advantage.