Why Buying an Existing Business is a Smart Move

Buying an existing business has many advantages compared to starting from scratch. Learn why buying an existing business is a smart move for entrepreneurs.

Why Buying an Existing Business is a Smart Move

Starting a business from scratch can be a daunting task, and it's no wonder that many entrepreneurs are now turning to the idea of buying an existing business. Buying an existing company has many advantages compared to starting from scratch, such as avoiding the headaches of developing new products, hiring staff and building a customer base. It also eliminates the risk of failure in the crucial early years, when many new companies don't make it. According to the Small Business Administration, 80 percent of small businesses survive the first year, while one in 12 small businesses close every year. When considering whether to buy an existing business or start one from scratch, it's important to consider how much capital you have available.

Buying an existing business is almost always more expensive up front than starting your own, but it's also easier to get funding for a business that has a proven track record. Plus, an existing company will have cash flow, while a startup won't. This means that you can focus on growing the company instead of just staying afloat. New entrepreneurs are embracing the concept of buying and then building. By buying a company that is already successful, you are likely to increase your chances of success compared to a startup that hasn't tested its expertise.

Buying an existing business also allows you to avoid some of the pain points associated with creating a business from scratch, such as initial costs, product launches and building a customer base. Companies with existing cash flow, brand recognition and a proven business model allow you to start working right away. Let's look at some of the main benefits to consider when buying an existing business. Financing options such as loans for the acquisition of a business are available for those who don't have enough cash on hand. This can help you avoid the burden of generating sales, maintaining sufficient cash flow and training employees from scratch.

You also have credibility right away, as customers don't have to try out an unknown brand. Buying an existing company offers the benefit of having an existing staff and structure in which you can participate and develop if you choose wisely. Don't underestimate the importance of making sure that you and the existing company are a good fit for each other. Buying an established company means you'll be able to make an immediate profit and be well on your way to the kind of financial freedom you have in mind. In comparison, new business owners must spend more time and energy searching for and creating valuable business relationships and growing them gradually. The key difference is that buying an existing company can generate greater financial reward because the additional revenue stream comes from a larger customer base.

Established companies can also use assets and inventory as collateral, which can ensure favorable funding compared to start-ups. Even if the previous owner can only be contacted by phone or email, having someone available who knows the company can help new owners get up to speed in less time. Buying an existing business is a smart move for entrepreneurs who want to avoid some of the risks associated with starting their own business from scratch.