When Buying a Business is Better Than Starting One

There’s a lot to be said for creating a new business for yourself; it’s your idea, your blood, sweat, and tears goes into launching it, and it’s your reputation to build. But what if the model already exists, or financially, you will need to generate revenue to repay the business’ debt sooner? While we’re certainly proponents of the entrepreneurial spirit, in many cases this can be exercised with the purchase of an existing business. Here are some of the benefits an entrepreneur will find with buying a business rather than starting your own.

You Know The Formula Works

The experimentation is over. If the business you want to buy has been operating for a while, then you can reasonably expect it’s providing some value in the market. That doesn’t mean it will be without challenges, but at least it means there’s an audience or customer base that needs/wants your product or service. When starting a business, there’s always that inherent risk that the product or service might not be what people want – you could be spending your time and money developing something no one wants.

The Infrastructure is in Place

One thing an entrepreneur will quickly learn is how difficult it can be to build up a network of vendors, employees, and customers. It can take years to amass a quality list of suppliers and service providers – but when you buy a business, much of this is already in place. You’ll have an easier time getting started as the new owner if there’s an existing infrastructure in place. Credit relationships with suppliers exist, and even real estate (owned or leased) is instrumental in running a successful business.

The Business Has Assets

Money is the life blood of any business. When you buy a business, there are typically assets that come with it – whether they’re inventory or equipment, there’s often something tangible to show for what you’ve purchased. This allows a new owner to apply for loans and other financing much more easily than someone just starting out. Business assets can be leveraged as collateral to help bring the business to the next level, as often is the case for acquiring a business.

There’s an Existing Customer Base

It can take a lot of time and effort to build up a customer base from scratch. But when you buy an existing business, you inherit that customer base. This can be incredibly valuable as it means not having to start at square one in terms of marketing and promoting your product or service. There are existing customers that know the business, and they like what you’re selling.

When it comes to deciding if you want to start a new business or buy one that’s already up and running, there are several factors at play. Is your idea something truly unique? Are you willing to spend years building out the infrastructure before you can generate revenue? Is there a need for the product or service in your market area? If so, then it might make sense to start something new. But if time is not on your side, and you have existing expertise that would lend itself well to an established business model – then buying a business might be worth considering.

If you’re interested in discussing business acquisition opportunities, contact a business broker today to learn more about the buying process and hear about currently listed businesses.