Advantages and Disadvantages of Buying an Established Business

The ultimate dream of any entrepreneur is to own their own business. Many of them have a fantastic business idea which can be successful when implemented, but some of these ideas fail miserably. This is the reason why most entrepreneurs are now opting to purchase a business that already exists. If you are looking for an established business to buy, there are certain advantages and disadvantages which you should be aware of before buying the business.

Advantages of buying an existing business

Business

The service or brand has already been tested in the market

One advantage of purchasing an established company is that you won’t have to start from scratch. Also, the brand or service has already been tested in the market. Buying a business that has a brand that has already been tested eliminates the risk which is associated with a new company.

Established customer base

A business cannot continue operating if it does not provide unique products and services to its customers. When you buy an already existing business, you will have access to the customer base, and you can even begin selling your new ideas to them since they already trust the company. An established client base will also help in quickly making sales, which can be turned into profits in a way that other entrepreneurial methods can’t offer. This is especially important if you are trying to tap into a local market. For example, if you imagine that you would have an opportunity selling in a specific industry to people located in Los Angeles, you should consider looking at Los Angeles businesses for sale and see if you can find something established in your chosen industry.

Start making profits soon than you would be with a start-up business

One of the main pros of purchasing an existing business is the time taken to make profits. When you purchase an existing business, it won’t take as much time to build everything. As a result, it will be easier to make sales, even within your first month of operation. Keep in mind that the majority of startup companies take several years to begin making sales that cover its operating costs

Establishment of business practices and procedures

A business which is already running should have practices, policies, and procedures which are used to govern its operations. This also means that there are practices which need to be followed in each sector. A business which is just starting can take up to a year to develop the practices, policies, and procedures necessary for its operation.

It’s easy to finance a business you are buying than a start-up

It’s easier and less risky for you to fund a company which is already up and running and which has a successful track record than a startup that’s future is uncertain.

Disadvantages of buying an existing business

You need to have business experience for you to run a business successfully

You may be in a position to buy an already existing company, but what will happen if you don’t possess the needed experience to run the business? Chances are that the business will fail. It’s better to first  gain the knowledge and experience needed for you to manage and run the business rather than running it blindly with the hope that it won’t fail.

High costs

Depending on the kind of business you want to start, building a business from scratch may cost you only a small amount of money. However, if you are buying an already established company, there are many costs which are involved, including legal and real estate fees. You have to have a lot of money if you want to buy an existing business.

Staff problems

Having workers who are trained and know how to operate the business can be a bonus for your business, but you might find that the staff is not happy with the change that comes with having a new boss. Before purchasing the company, have a meeting with the staff members and interact with them to know if they will be loyal to you. Some staff members might decide to hold a grudge against you, and this might affect how they perform at work.

Implementing new ideas might not be a good idea

You may have a brilliant idea which will take the business to another level, but the customer base may not like it or accept it. You might also find that the staff members are not happy with the implementation of the new ideas. This can make your business not as profitable as you would want it to.

An entrepreneur is the only person who is in a position to determine whether buying an existing business is a good idea or not. You can make a good decision after evaluating the above pros and cons and decide whether you want to purchase an existing business or start your own.