There are significant advantages to buying an existing business versus starting a new business. What better way is there to maximize the probability of success than to review actual operating results rather than projections? If a business has been successfully owned and operated by the same owner for a number of years and if that business has been the source of income for his family, you can be reasonably sure that the business will be viable long-term.
Here are a few of the many other advantages of buying an existing business:
- Immediate Cash Flow – No expensive advertising to lure customers. The cash register starts ringing the first day you take over, just like it did the day before the seller of the business sold to you.
- Trained Employees – When you take over the business, you will have a complete crew of trained employees to run the business with no down time for training and no customer dissatisfaction with untrained employees.
- Established Suppliers and Credit – For the most part, existing suppliers will continue to do business with you without missing a beat. Remember that they have been supplying the business for a while and they know it is a good business. They do not want to lose your business; they want you to succeed and purchase additional goods and services from them!
- Established Customers and Referral Business – Your customer base is already in place and accustomed to doing business with your company. Assuming you continue to deliver the same (or improved) levels of service, they should refer additional customers your way.
- Existing Licenses and Permits – In many cases, all you have to do is transfer the licenses and permits to your name. In those cases where you have to reapply for a license or permit, you have the comfort of knowing that the business, in its current location, was approved for the license or permit (for example, a liquor license for a restaurant).
- Training By the Seller – In addition to the trained employees, you will receive training from the seller on how to operate the business. You will be introduced to customers and suppliers and will get the benefit of the seller’s extensive experience in running the business. You will not have to make the same mistakes the seller made.
- The Availability of Owner Financing – Over 90% of the businesses sold have a portion financed by the seller of the business. This may be the single most important advantage of buying an existing business because the seller retains a vested interest in your success.