Buying an existing
Business
Many find the idea of running a
small business appealing, but lose their motivation after dealing
with business plans, investors, and legal issues associated with
new start-ups. For those disheartened by such risky undertakings,
buying an existing business is often a simpler and safer
alternative.
Advantages of buying a business
The main reason to buy an
existing business is the drastic reduction in start-up costs of
time, money, and energy. In addition, cash flow may start
immediately thanks to existing inventory and receivables. Other
benefits include pre-existing customer goodwill and easier
financing opportunities, if the business has a positive track
record.
Disadvantages of buying a
business
The biggest block to buying a
small business outright is the initial purchasing cost. Because
the business concept, customer base, brands, and other fundamental
work has already been done, the financial costs of acquiring an
existing business is usually greater then starting one from
nothing. Other possible disadvantages include hidden problems
associated with the business and receivables that are valued at
the time of purchase, but later turn out to be non-collectable.
Good research is the key to avoiding these problems.
