To Buy or Not to Buy? The Lowdown on Purchasing an Existing Business

By Stefanie Neyland, Small Business Content Developer at BizLaunch.com

 

When you’ve come to the point in life when you are absolutely sure that you want to be your own boss, then you will inevitably come to the following decision: Should I build my own business from the ground up, or should I buy an existing business?

Before making the decision to buy a business, you need to carefully consider which option is right for you, so let’s explore the pros and cons of buying a company.

 

PROS

 

1. It may save you time

By buying an existing business, you’ll be able to save time, energy and money. The model for doing business should already be in place—from equipment to infrastructure—and the previous owner may even be on on hand to help guide you through the transition period during the ownership transfer.

 

2. Positive cash flow

Another perk of buying an existing business is that the cash will already be flowing, which can help business owners forgo those first couple of years of growing pains that come with building a business from the ground up. This can be a huge burden to new entrepreneurs, and the thought of a positive cash flow can make the whole process of business ownership a lot less intimidating.

 

CONS

 

1. Can be hard to get your head around

As an outsider coming into a business, you’ll have to learn and familiarize yourself with the Standard Operating Procedures (SOP’s). If you’re quick at picking up new things, this should be a breeze. If, however, you’re not a quick study, the learning curve could be difficult to master.

 

2. Problems may need ironing out

More often than not, there is usually a reason that a business is being sold. And that reason might be that the venture simply wasn’t profitable enough. As a result, you’ll likely absorb any inefficiencies as part of the transfer of ownership, and it will be up to you to pinpoint what they are and try to correct them.

 

The idea of buying an existing business is attractive to many entrepreneurs as it allows them to “step into success”—you can hit the ground running safe in the knowledge that the company already has a profitable system in place.

After reviewing the advantages and disadvantages outlined above, take a moment to consider if these things are important to you. If you put in the hard-work, stay positive, and prepare right, buying a business can be a fun and enjoyable part of your life. All you have to do is prepare yourself for the road ahead and success is sure to follow.