So you want to be your own boss
Starting a business can pay great dividends, but it’s important to understand that the risks are significant. Unfortunately, most start-up businesses will close their doors within the first 5 years. On the other hand, purchasing an existing business reduces an entrepreneur’s risk while creating opportunities for tremendous profit. If a business has been successfully owned and operated by the same owner for several years, you can reasonably conclude that the business will be viable long-term under another competent and qualified owner.
There are many reasons to consider the purchase of an existing business rather than starting one:
- Immediate cash flow – The cash register starts ringing the first day you take over, just like it did the day before for the seller of the business.
- Trained employees – When you buy a business, you will typically have a team of trained employees to run the business.
- Established suppliers and credit – For the most part, existing suppliers will continue to do business with you without missing a beat. They do not want to lose your business; they want you to succeed and purchase additional goods and services from them!
- Established customers – 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.
- 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 experience in running the business. You will not have to make the same mistakes the Seller made!