Don’t Start a Business – Buy One.
Buying a business is just one avenue towards a common entrepreneurial goal – success.
The dream of starting a business is one that many entrepreneurs share. With so many exciting options and opportunities, starting a business or even franchise can be a fulfilling endeavor that reaps wonderful financial dividends. But have you considered buying an existing business? Statistics show much higher success rates when buying an existing business as opposed to starting a new one, which only has about a 50% chance of surviving more than 5 years.
As an entrepreneur, you need to weigh risks and rewards on a daily basis. The risks of starting a new business as opposed to buying an existing business all narrow down to failure and success rates. Even franchises have pros and cons and can fail due to lack of franchisor support, location or marketing. The reward of purchasing an existing business is that the business is already successful and making money. As the new owner, you will not need to worry about finding customers and employees, bank financing, or a reputation like you would with a startup – all of that groundwork has been laid for you.
Buying a business as opposed to starting a new one has many benefits that will assist you on your entrepreneurial journey towards success.
Customer Base: An existing business already has established clients and revenue streams. Most entrepreneurs do not realize that building a steady, reliable customer base is harder than it sounds when you do not have a credible reputation yet.
Location & Facility: No need to search for the ideal location or negotiate for a facility – this has already been done for you.
Reputation: Building credibility in the community and industry is tough. Convincing customers to leave their current providers and give a startup a chancer is even tougher. Buying a running business already comes with established reputation and word of mouth marketing.
Proven Processes: The trial and error phase of testing systems and processes can be tedious. An established business already knows what works and what doesn’t, and should have tried and true processes in place for the new owner.
Experienced Employees: Skipping the task of finding, hiring and training good employees is a luxury. If the former owner has good employees in place, your transition into the business should be virtually seamless.
Goodwill: Inheriting the goodwill of an existing business gives any new owner a major advantage to growing a successful business. The years spent building goodwill can be tedious, by purchasing a business, you get a headstart.
Financing: It is much easier to secure financing when buying a business than it is when starting a new one. Lending institutions place a lower risk on businesses with established credit lines, a customer base and steady cash flows than startups with little certainty.
Seller’s Experience: The Seller’s experience will help lessen the training period and learning curve for the new owner. Many Sellers stay on board to assist in the transition because they want to see the business flourish, even after they exit.
Growth Opportunities: Starting a business is hard and expansion opportunities are usually several years out of reach. Buying an existing business gives you a much short timeline for growth and expansion opportunities and a steady support system for initial expenses during growth.
By nature, entrepreneurs want to dream, create and build. The option of buying a business instead of starting one is just one avenue towards a common entrepreneurial goal – success. While you may have your eye on starting a business and building it from the ground up, do not dismiss the idea of buying an existing business just yet.