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Why Buy an Existing Business?

By Richard Parker: President of The Business Buyer Resource Center and author of How To Buy A Good Business At A Great Price ©


With so many options available to you, the question will become which path of the business ownership arena should you pursue? Between franchises, existing businesses, and start-ups, it can become a bit overwhelming. However, there is one choice that makes the most sense if you want to have your own business.


Your chances of success are clearly best when you buy an existing, profitable business for many reasons, which we’ll discuss in a moment.


While the idea of a franchise appeals to many people, don’t buy a new location; buy a resale that’s already successful. This way, you marry the best of franchises and existing businesses.


With a start-up you have two challenges: developing the product or service and then seeing what, if anything, people are willing to pay you for it. It’s a lot of guessing. On paper the plans usually sound great but the results tell a different story. 96% of all start-ups fail in the first five years.


Ease of Investigation

With an existing business you will have access to actual historical information that will allow you to thoroughly investigate its past activities, the financials, the market, the customers, the industry, the employees, the competition, its operations, its current status, and its future potential.


Regardless of a company’s past performance,

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an existing business or franchise resale will, at the very least, have a history from which you will be able to make certain decisions. Even if the company was not very profitable in the past, your strengths may lend them perfectly to turning it into a viable venture. Furthermore, you have the ability to verify what the company did in the past that resulted in the current status of the operation.


Clearly, this information-gathering stage will be substantially more accurate and easier to obtain when dealing with an existing business since you have the actual history.

In a start-up, everything is a guess.


A new franchise offers absolutely no guarantee of how well or poorly the business will do. At best, you may have some comparable data but it’s not reality. A new franchise is basically a start-up that has enjoyed some success in some other locations under certain conditions.


Ready Made Infrastructure

When you buy an existing business you will have the benefit of a built-in infrastructure. You will inherit active customers, suppliers, employees, equipment and systems. This will allow you to focus on building the business as opposed to a start-up or new franchise where you’re starting with nothing.


Sales will be generated the day you take over. In fact, when done right you can get the keys to your business on Monday and take a pay check on Friday!


Purchase Price Differences

Buying an existing business does not mean that it will cost you more. In fact, many times it’s less expensive than launching a start-up. Even in those cases where it may require a premium, at least you know what you are getting. Plus, with the right information you can negotiate incredible deal terms that you could not achieve with a new business.


Flexibility in Negotiating

You will have far more flexibility when negotiating the purchase of an existing business or franchise versus any other options available; it’s not even close!


Everything from the purchase price to financing is open to negotiation. However, there is a lot you need to know in order to buy a good, solid business that can become great with you at the helm. When you have access to the right information and advice you’re going to make the right decisions.


Once you buy a good existing business you will hit the ground running and have a foundation in place from which you can really grow the company.


For many, owning a business is a dream. For some, it will become reality. Your fate is in your hands. Whether you choose a start-up, franchise, or existing business, it can be done. It’s up to you. Currently, the market is in your favor and the time is right, for you to finally put yourself in a position to be your own boss.

-From www.diomo.com