There are pros and cons to buying a business and starting your own business from scratch. For lots of people, the positives of buying an existing business outweigh the positives of starting a business. Here are the reasons why buying an existing business could be the best choice.
Easier To Secure Finance
All businesses will need finance behind them. Unless you can fund that yourself, you’ll need to secure financing from investors. Most lenders will be more inclined to lend money for the purchase of an established business that they can already see if successful, than supporting an unknown start-up which is more of a risk.
From the point of view of an investor, there is less risk involved in putting money into a business that has already shown that it can generate an income.
Income From Day One
One of the downsides of a start-up is that most start-up businesses go through an early stage where they don’t make any money. For some, this phase can last three years or more.
During this period, you might need to pay out for the premises itself, as well as equipment, installation of equipment, stock, materials, fixtures and fittings, legal and professional fees, a license, uniforms, and more.
If you don’t have finance in place or another form of income, this stage can be hard for a new business owner. If you buy a business, you can start earning from day one. To buy a successful business and start earning, you can use a company like https://thedvsgroup.com/our-services/buying-a-business/ to guide you through the process.
When you buy an existing business, you are also buying into a brand that is already recognizable and has a track record. You get it complete with all the trademarks, copyrights, and websites associated with the brand that you’ve bought.
This means that you’ll have customers, lenders, suppliers, and other contacts that have confidence in your business that they might not have when they deal with a start-up that they don’t know.
Instant Customer Access
An existing business also has customers that are at the ready. You can use a range of strategies and marketing to build on that existing customer base, but won’t have to work on building a customer base on scratch.
Established Network Of Contacts
When you start a business, a large amount of your time and energy has to be put into building up a network of contacts.
All businesses need good supplier and marketing contacts, so buying an existing business with those contacts in places allows you to hit the ground running from the get-go.
Like money lenders, supplier and marketing companies are more likely to offer you more favorable terms if your business has been around for a while.
Focus On Growing The Business
When an entrepreneur starts a new business, they will have to channel a lot of their energy into getting their business off the ground. This takes a lot of time and can be exhausting.
On the other hand, when you take over a business that is already established, you’ll be freer to focus on the areas of the business that most need your attention, aiding the growth of the business as a whole.
Income To Put Back Into The Business
Lack of finance to put towards what you want to do can be very frustrating with a start-up business. A lot of money is sunk into buying the resources that you need to get the business started, which means that dreams sometimes have to be put aside.
When you take over an established business with a steady income, then you will have more freedom in how you choose to invest profit back into the business.
Trained Employees In Place
In the same way that it takes time to build up a network of trusted suppliers and contacts, it will also take a new business to find and train a team of good employees. When you take on a business that is already established, these employees should already be in place.
This can make it a lot easier to put in place strategies to grow the business and develop your team. It will also mean that you already have a trained team in place that can keep things running if you need to take time off in the early days of running the business.
There is of course a lot less financial risk for lenders involved in buying a business, and it’s also a safer option for the potential owner of the business.
As long as the business you buy is doing reasonably well, then it should continue to do well under new ownership. When you start a new business, you’re stepping into unknown territory as far as financial security is concerned.
Starting a new business can easily become completely all-consuming. There’s a lot to do when you start a new business, and it’s easy to let your business take over your entire life.
If you don’t have a vast amount of passion and energy for the business that you’re starting, then it can be easy to get burnt out and start resenting your business instead of feeling excited about it.
When you take over an established business, the business practices have already been streamlined. You already have employees in place who know how the business works, so you won’t have to work all hours yourself to get things done.
The problem with setting up a business of your own is that it’s rarely as glamorous as people expect it to be. Getting started and surviving through the setup phase to the point where you can start earning money is a hard slog. If you have business skills and know-how, then why waste them on this part, when could buy a business that is already up and running, and develop it into something that is more successful? An existing business can be a great choice for budding entrepreneurs.