Advantages of Buying an Existing Business
The main benefit of buying an existing business is all the legwork has already been done. Getting a business off the ground is often the riskiest and most difficult stage of any new business venture. It is safer and more profitable to buy an existing business than start a new one. According to the Small Business Administration, more than 50% of startup businesses fail due to unproven concepts, lack of working capital, and poor management.
Some other advantages in acquiring an existing business include:
The ability to review a company's existing track record substantiated by profit / loss statements, tax returns and other financial records.
Growth potential can be measured based on actual experience rather than conjecture associated with startup ventures.
The need for additional working capital is reduced due to the immediate cash flow already being generated by established customers.
Skilled employees who are familiar with the business operation are already in place.
Existing licenses and permits can often reduce the time and cost of making application, gathering information and conforming to required regulations.
Location / demographics have already been market tested & proven.
Pricing and competition are already known quantities.
Policies and procedures are in place.
Established suppliers / vendors are already in place.
Established relationships with professional advisers, insurance companies, advertisers.
Furniture, Office Machines & Communication Equipment are in place.
Established market presence, such as a website, is already in place.
Sources of capital to purchase existing businesses are more readily available than startup ventures.