You know the old adage, “work smarter, not harder”? That often applies in many ways in the world of small business. If you have been thinking of starting a business, here are 10 reasons why buying a business is generally less risky, less stressful, and more likely to yield higher income sooner.
Everything is in Place
Buying an existing business means you're getting a functional, real-life model with a proven financial track record, existing contracts, and established supplier relationships. Why do people buy franchises? Because the mistakes have been made and the lessons have been learned. You don’t have to buy a franchise, but it’s very smart to heed what others before you have learned the hard way.
Choice of Commitment
Instead of starting from scratch and hoping to grow to the size and profitability you want, you can choose the business size, consistent profit level, and industry you're comfortable with.
Manageable Workload
Running an acquired business is often less time-consuming than starting a new one, thanks to existing personnel, processes, and revenues. If you’ve ever heard the expression “quitting a job working 40 hours a week for someone else to start a business and work 80 hours a week for yourself”. That comes from business owners who have come before you.
Recognized Brand
Established businesses come with a ready-made brand reputation including customer reviews, loyal clientele. This can take a lot of time to build from scratch.
Income and Cash Flow
Predictable income and cash flow are readily available with an established business, while startups often struggle to achieve profitability. A business has a history proving what it can earn. Starting a business has no such track history.
Low-Risk Option
Established businesses have a higher chance of success compared to startups, making it easier to secure loans on favorable terms. SBA loans are prevalent currently. Funding for start ups can be very spotty and difficult to acquire.
Skilled Team
Acquiring a business with a talented team in place is a significant advantage, saving you time and effort in recruitment, hiring and training. The current owner of the business is going to train you most times and often skilled employees will remain after the sale to keep things running smoothly.
Existing Relationships
Established businesses have secure supply chains, vendors and suppliers ensuring smooth trading relationships and better terms for new agreements. Other advantages to start ups can be found in insurance rates and other terms.
Existing Customers
An existing customer base means you don't have to start from scratch to get your name out and build a client roster. You simply need to keep doing what has been proven to work and keep your customers happy.
Focus on Growth
With an existing business, you can skip the challenging startup phase and focus on long-term strategic growth. Business development and winning market share are much easier.
Choosing between starting from scratch and buying an existing business can significantly impact your success and stress levels. If you think that now is the right time for you to start shopping for a business, Transworld Business Advisors of Colorado can help!