Starting a business is your gateway to fulfilling your dreams. However, not everyone is cut out for starting a business from scratch. Luckily, there is something you can do and still achieve your goals of becoming an entrepreneur. Buying an established business has its advantages and disadvantages. Here is the information you need to help you make the right decision when purchasing a business.
- Pros
The business concept has already been approved
With an existing business, you know the market’s response to the service and products. Also, given that the business will have some structures in place, you will save on time. You can get started building the company towards success. You also get the following when you buy an established business:
Customer base
Inventory
Office space
Established brand
Management processes
Supplier base
Existing employees
Lower operating costs
You also benefit from the low operating cost of the established company. The initial operating cost is reduced because most of the items needed for the business are already in place. You do not require a lot of money hiring employees, building a customer base, and developing marketing strategies. You can use the funds to expand the business.
Easy to get financing
When you buy one of the aged corporations for sale, investors see it as having lower risk. The company has a history of financial performance that can be used in lending you money. It also increases the likelihood of investors investing in the business.
Save time
You can start selling as soon as you finish paying for the company. The business has already trained staff, pre-existing supplier, set procedures, and protocols. All this means that you can continue with operations immediately. The previous owner will have completed many of the business tasks for you.
Established brand
Brands help in expanding the customer base as well as your market presence. Entrepreneurs often struggle to get their brands known, especially when they are starting up. Buying an established business enables you to save time and money that you would have used to get your brand out there.
- Cons
High upfront fees
Buying an established business allow you to save money on inventory costs, but you have to part with a lot of money to acquire it. The price may even be higher than what you could pay to start up a business from scratch. In addition to the asset, you will also be buying the business concept, and already built a brand, customer base, income stream, and intellectual property.
Bad reputation
If you do not do your research correctly, you could get a business with a bad reputation. The company could be experiencing issues such as legal trouble and poor customer service. Customers would not change their mind, even if a company has a new owner if they had associated the business with negativity.
Being unfamiliar with the details
You will not be too familiar with a business that you did not start. You will be unfamiliar with the employees, processes, financials, and details about the products.
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