5 Reasons Buying a Business is Preferable to Starting a New One

If you are considering running your own business, one of the first questions that might pop in your mind is: should I start a new one or buy an established company. In this article, we’ll take a closer look at the age-old dilemma of buying an existing business versus starting a new one from scratch.

1. An Established Concept

The benefits of buying an established business are, no doubt huge. At the top of the list is that an existing business will have an established concept. Starting a business from scratch means taking a significant risk in the form of a new idea. Will it really work? If the company fails, why did it fail? Both of these stressful questions need not be asked when you buy. An established business, especially one that has been around for years, has already shown that the concept and all the variables that go into it do, in fact, work.

2. Proven Cash Flow

Another massive benefit of buying an existing business is that an existing business has proven cash flow. You can look at the books and, in the process, determine just how much money is flowing in and out. With a new business, you simply won’t be sure how much it will generate. This can make it tricky when you’re trying to figure out how to not only pay your business expenses but your personal ones as well.

3. The Unproven Element

No matter how good your idea and/or your location, your new business is still unproven. Despite the best of efforts, there may be an unforeseen variable that you or your consultants might have missed. However, when you opt for a proven, existing business, this variable does not apply to you.

4. An Established Staff

A company is often only as good as the people that populate and support it. Starting up your own business means that you have to go out and find all of your employees. This process is much more than sifting through resumes. A resume only reveals so much. A resume doesn’t tell if a candidate will be a good fit for the business, and it certainly doesn’t factor in chemistry. As any good coach of any team sport knows, chemistry is one of the most significant factors in winning a championship.

5. Established Relationships

A proven business also comes with an array of business relationships. Working out problems with your supply chain in the early days of your business can mean the end of that business. Many business owners have seen their businesses undone by problems with their supply chains. An existing company can point the way to reliable and consistent suppliers. When buying an existing business, you are acquiring a proven performer. You know that the business had what it takes to provide cash flow over a given period of time. You will also have customers who know who you are, where you are, and how to buy from you. Buying an existing business also means gaining access to reliable suppliers and enjoying all the benefits that come with an established brand name and location.

6. The seller can help with a transition

A seller almost always stays on after the sale to help you with learning the business and introducing you to employees, customers, and possibly some suppliers as well. You can read more about how to have a successful transition working with the seller.

If you are interested in buying a business, please view our Businesses for Sale in NY, NJ, PA, CT, MA, and more.

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