Coming up with an original idea, assembling the perfect team, and securing funding for growth, etc. can be a daunting task for a to be entrepreneur. But there is a better option you can think of, a less stressful path to self-employment: buying a business. It’s like renovating a house instead of building from scratch.
Buying an existing business can be an attractive option for turning your entrepreneurial dreams into reality. So why not explore this option?
So why you should consider this route to entrepreneurship, let’s break it down.
1. You need not start from the square one and grind it out
Being an owner of the business, you need to find customers, forge relationships with vendors, hire a good team, set up shop, and a whole lot more. It’s like building a house from scratch – it takes time and effort. When you buy an existing business, many of these things are already in place. The employees have been there, done that, and are ready to tackle any challenge that comes their way.
Instead of starting from square one and grinding it out, you can hit the ground running with a business that is already running. Buying a business may not guarantee a ticket to success, but with the right diligence and a bit of luck, the financial upside is pretty appealing.
2. You may already know the business well
When you already have the experience of the same type of work or industry then you are primed for success when it comes to taking over from the founder.
When you already know the details of the business small businesses you are in the perfect position to snatch up the competition. Buying out your rivals can be a savvy move, especially if you are serving similar customer groups. It’s like expanding your empire while staying true to your roots. You can also explore opportunities beyond your industry or neighborhood. Brokers can help you uncover hidden gems that you might never have considered otherwise.
3. Financing may be easily available
Getting startup funding for a new venture can be very difficult to find. You may rely on your savings or friends and family to get your business up and running. But when you are planning to buy an already existing business there’s capital and loans available from banks. This is a main advantage. SBA loan is another option.
As startups don’t have a revenue history, they can’t get such type of financing. but when buying an existing business, lenders can evaluate business financials and make predictions about the business’s future performance. Plus, business sellers themselves might be keen to finance the purchase, especially if they are eyeing retirement and don’t have a successor lined up.
Buying a business not only gives you a leg up in the financing game but also opens doors to a world of opportunities.
4. You can do due diligence
Buying an already existing business requires a bit of detective work and a whole lot of caution. The very first step should be to peek into the business’s books to ensure everything’s squeaky clean. From worker classifications to sales tax compliance, you want to make sure no skeletons are hiding in the closet.
You must watch out for red flags like pending litigation, tarnished reputations, and over-reliance on family members. And if a business relies heavily on one person’s expertise, that’s a potential recipe for disaster.
You must take the help of seasoned attorneys and CPAs who specialize in business acquisitions. They will help you navigate the legal and tax minefield, ensuring you are doing everything correctly. Buying an already existing business is a risk, so it’s essential to have a personal financial plan in place to weather any storms that may come your way.
5. You already have clients and/or customers
The value of having customers right from the get-go is a big advantage. From day one, you have got a steady income stream and a solid reputation in the marketplace. Also, you can get valuable insights from already existing customers about what they love and where there is room for improvement.
Having a loyal customer base helps in building meaningful relationships and continuously refining your offerings to better serve their needs. So, when you think about it, having customers from day one is worth its weight in gold.