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10 Reasons to Buy an Existing Business

Starting on the path of business is hard and choosing the specific path is even harder.  Nevertheless, no matter what path you choose, there will always be risks that you’ll have to take when starting a business.  Going into business, though, doesn’t always have to be a leap of faith.  Although there will always be an element of risk involved, you can considerably lessen the risks by buying an existing business.

1. Facts vs. theories:  You will have a great deal more facts to work with.  Some of these facts are the average revenue per month, the inventory turnover, the number of new customers, average profit per month, etc.  More facts mean fewer theories and less guesswork.

2. Existing system vs. experience:  With an existing business, all you have to do is to improve on the systems and infrastructure that are already in place.  If these were working right before you bought it, then there will be less chance of making the expensive start-up mistakes that entrepreneurs always charge to experience.

3. Shorter ROI time:  Typically, ROI timeframe is shorter.  You don’t have to spend as much time building the business; operations can commence the day after you sign the papers.  You do away with the development stage and go right to the production stage.

4. New vs. second-hand:  Most (if not all) of the equipment, furniture and other assets are second-hand.  This represents considerable negotiating leverage when it comes to the business selling price.  Second-hand assets are always cheaper than new ones although they are not always inferior in quality.

5. Existing customers:  When buying an existing business, you get the business’ existing customers as well.  This means you don’t have to go through nerve wracking months of hoping for customers to stumble in.

6. Experienced employees:  You also get the business’ experienced employees.  This means less training costs, fewer mistakes and fewer aspirins on your part.  But then of course, the task of breaking bad habits falls upon you as well.

7. Better financing options:  When you buy a business that is at least two years old or more, you also get to buy the financial options that come with the track record.  Banks are ‘friendlier’ to businesses that have been up and running for at least two years.  This gives you the option to take out a loan to augment the business capability or to upgrade the operations.

8. Known vs. unknown:  An existing business would also have (for good or bad) an established place and identity in the market.  This means that you don’t have to fight hard for a place in your target niche.

9. Having a mentor plus flexibility:  When you buy an existing business, you also get a mentor (the seller) who can help you learn the business thoroughly.  This is almost as good as going into business as a franchisee.  Unlike a franchisee though, you will have more options, more flexibility and total control when it comes to making crucial decisions about your business.

10. Less risk:  From all of the above reasons, buying an existing business means less risk.  Of course, this also depends upon the care you have taken to make sure that you have chosen the right business to buy.  Good luck and good hunting!

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