The Advantages of Buying an Existing Business
Buying a business
We walk you through 7 advantages that will give you some guidance.
Top 7 Reasons to Buy an Existing or Established Business:
An established client base
Branding
Avoid startup costs
Internal operations
Access to performance history and insights
An existing team
A proven product or service
Becoming an entrepreneur is well known for how rewarding it can be. In many cases, it can also help you generate a large amount of income.
But, you don’t always need to start your own business in order to become a business owner — many entrepreneurs choose to buy a business that already exists.
Not sure where to start? We’ve put together a guide with everything you need to know. Let’s dive in.
An Established Client Base
As you might expect, one of the primary benefits of purchasing an existing business is being able to leverage its existing client base. More often than not, acquiring new customers is something that requires plenty of research, time, and resources.
In some scenarios, it may prove to be exceedingly difficult to do so.
When you remove this factor entirely, you can place much more emphasis on the growth of your business. A factor to consider, however, is how much the existing customers resonate with the current business owner.
If their loyalty is tied to this individual, you may not see the performance levels that you anticipate.
In most scenarios, however, the transition will be smooth and you will be able to immediately take advantage of this existing client base.
Branding
Without proper branding, your business will struggle — that is simply a fact of life. Fortunately, the business that you are considering purchasing has already laid the groundwork for solid branding.
After all, the branding is likely what got you interested in buying the company in the first place.
The power of branding simply can’t be overstated. For example, let’s assume that you are looking to operate a business within the athletic apparel space.
Now, imagine you were hypothetically able to purchase Nike. You would immediately have access to some of the most powerful branding in the entire world.
You Will Avoid Startup Costs
The largest deterrent that entrepreneurs face when looking to start a business is startup costs. Depending on the industry they operate within, your product/service, etc., these costs could even be hundreds of thousands of dollars.
In some cases, starting your business might require millions of dollars in funding.
Interestingly, purchasing an existing successful business is often cheaper than starting one yourself. This is especially true if you are able to purchase a successful company that has only been around for a few years.
Internal Operations
The internal operations of an organization are essentially the backbone of the entire company. If they are not structured properly, the business will not be able to function optimally.
This could easily result in falling far short of intended metrics. In some cases, suboptimal internal operations could cause your business to struggle to stay afloat.
A successful business more than likely only reaches this point because it properly configured its internal procedures. While there are scenarios where some businesses succeed due to entering the market at the right time, most become profitable because of these decisions.
So, you will be able to take advantage of the framework an experienced business owner has laid out as opposed to creating one for yourself.
Insight Into Its Performance History
It should come as no surprise that having insight into a company’s performance history is a powerful attribute that simply can’t be ignored. Unfortunately, you will not have access to this type of information when you start your own company.
Instead, you will have to lay the foundation for your future success and hope that everything turns out as intended.
When looking to purchase a company, you should look for an upward trend in its performance. Although it might not currently be at the status you desire, if the company has been growing every year, this is a good sign.
So, keep this in mind when searching for a company to buy.
An Existing Team
It can take years and tens of thousands of dollars to assemble a proper team for your business. Additionally, failure to do so can often prevent you from reaching optimal levels of performance.
By leveraging an existing team, you can forego this obligation entirely. In many cases, you won’t even need to make adjustments to the existing team if they have been proven to produce the results you desire.
You would simply let them operate as normal and provide guidance when necessary depending on your intended metrics.
A Proven Product or Service
If you offer a product or service that has not been proven to provide value to your audience, there is no guarantee that your business will ever be successful. In the event that your business fails, you will likely find yourself in an insurmountable amount of debt, develop a poor reputation as an entrepreneur, etc.
Any business that you purchase should have a product or service that has consistently performed well over time. Not only will you be able to pick up where the previous owner left off, but you can also avoid the substantial amount of research involved in developing a product that customers will actually buy.
Deciding Whether or Not to Buy a Business Can Seem Difficult
But, it’s not as complicated as you might anticipate. With the above information in mind, you’ll be able to pursue all the benefits that you can receive when you buy a business that already exists.
Want to learn more about what we have to offer? Feel free to reach out to us today and see how we can help.
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