You need to first ask yourself this question whether you are capable of starting a new business or taking up an existing one. Intelligence alone cannot help you start a new business, but a bit of creativity and innovative is also needed. It’s an advantage if you have owned or managed a established business before, so that you can use that knowledge to buy the type of business. You need to be sure what kind of business is worth you investing your time and do you have the management skills to make it happen.
Since your business has a good foundation, you can focus your attention to building and expanding the business. With experience you will become more familiar with your customers needs and have opportunities to improve, which increases your chances of higher profitability sooner than you would in a startup business.
Given below are the main advantages of buying an established business:
There is immediate cash flow: There is immediate cash flow as you are not investing in something. You just have to take over it and get the work moving.
You have an established customer base: You have customers of the previous employer. It automatically gives you a referral base. You only have to make them satisfied with your work and maintain them.
Trained employees are present: This is one the most important advantages. It can be a major headache training new people and during that period, it becomes an investment for you.
Established suppliers & credit facilities: You have suppliers whom you can trust and credit facilities also
Existing licenses & permits are in place: Getting licenses and permits can be very difficult. Here you need not bother as everything is in order.
You have the availability of vendor finance: Vendor finance is very important for you.
A good broker will help you obtain the business background information about the organization. Below are certain questions you need to know more about the business you are going to buy.
- What is the reason they are selling the business?
- What are the current sales trends in that business?
- What is the current cost occurring in that business?
- What assets does the company have like land and leases?
- What are the debts does the company currently have?
- Does the current business have a business plan?
If the answer to the above questions satisfies you, then you can be very confident about buying that business. You will also want to remember that there are no guarantees in business and you will have to be prepared for the risk. There are reasons for that including; insufficient operating capital, poor management, inability to develop a strong customer base, etc.