Should you but or a start a business?

I will not keep you in suspense for too long. In my opinion, buying an existing business has a much better chance of success than starting a new one. You avoid the hassles of building a reputation and customer base or market. It is quicker and easier. And based on the history of performance you know more and less what to expect in terms of results.

Here are the 10 advantages of Buying an Existing Business

1. The necessary permits and licenses to operate the business are usually already active, in place, and filed with the proper agencies. You will also be the owner of valuable proprietary rights – patents, trade names, brand names, copyrights, and the like.

2. It is easier to obtain a loan from the bank or from investors – both are more comfortable lending money to a business with a proven track record.

3. The business already has an existing product or service for sale, while a start-up business still has to develop a product or service and market it with no assurance of success.

4.  The customer base is already established. You only have to maintain the existing customers and you can try to increase sales by exercising the same standards that brought the company to where it is now. It will take a new business for many years to build a customer base.

5.  An existing business already generates cash flow and hopefully substantial profits so you can have an easier start. But always remember to keep enough money as cash reserves. That is the key to survival in case the market goes through a sudden downtrend.

6. The business has built a reputation in the industry and market. Just advertise that the business is under new management. A starting business, though, has to spend a lot of money on advertising to introduce the company, what it offers, and where it is located. It also has no track record or reputation.

7. There is an existing network of vendors or suppliers. Business systems for marketing, inventory, operations, maintenance, sales, etc. are already in place. These may need only some minor modifications.

8.  Knowledgeable employees already familiar with running the business are usually in place willing to continue with the new ownership and management, whereas a new business needs some time to find employees and train them.

9.  The risk of failure is far less as you can learn from real historical performance to help you make decisions. Problems or kinks in most aspects of the business have already ironed out.

10.  You can focus immediately on increasing the profits by adding to the customer base, increasing prices, selling more, and/or reducing expenses.

If you have acquired a successful business, then continue running it using the same systems and automation but work on scaling the operation and sales through expanded marketing and services.

If you have acquired a business in need of a turnaround, then study what worked for them in the past especially in the marketing efforts, and prepare to deliver the best products and services to regain sales, market share, and profit margins.

Following the right formulas to grow a steady business or correct a downtrend in performance is the key to building the ultimate success and long term profits.

Wishing you the best business acquisition,

Cherif Medawar