There is nothing more exciting than owning a business that you are passionate about, however, there are a few questions that need some consideration before you jump in and regret it later:
- Should you buy a business or start one?
- What are the advantages of starting and buying?
- What pitfalls should I be aware of?
We are here to explain why we believe that buying a business far outweighs the advantages of starting one from scratch. So let’s begin with our 8 reasons why purchasing a business is the sensible and logical way of achieving your ultimate goal.
1 – Income from the moment you take over
When you set out to start a business it can be a long and painful road to gain your first customers, then convince them to use you again and again, pay all of your expenses and leave you with some profit at the end. Why not speed up the process by having a business with pre-existing positive cash flow from day one.
Many small business owners will tell you that a good amount of investment is needed to get the business started, along with late nights and lots of energy. When a business owner sells their business, it’s valued on the cash flow it produces and fails to take into account all the late nights and missed dinners with friends and family.
2 – Instant Branding
Deciding on a name, logo and colour scheme may sound like fun, but isn’t it simpler to have a brand that people already know like and trust. Yes, the branding may not be what you would have wanted, but tweaks can always be made down the line.
3 – Access to Customers
Having access to customers who already trust the business can give great opportunities to new owners. Let’s say you have a complementary product or service to offer to them, there is already a pool of people who may take the plunge without any advertising costs incurred.
4 – An established network of contacts
Lots of time and energy has gone into creating their contacts, and you instantly gain access to these contacts. No picking up the yellow pages and searching for a widget manufacturer. Having Good suppliers and marketing contacts are a valuable asset to any business.
5 – Income to reinvest in the business
Accessing finance for a startup is seriously hard. With a steady stream of income from an established business, you have more freedom in how you choose to re-invest the money.
6 – Securing Finance
Whether you need finance to purchase the business or to grow the business, having a track record certainly helps lenders understand and protect their risk. There are lots of ways to finance a business acquisition if you do not have all the cash on day one.
7 – Trained Staff
Having great staff makes a business what it is, and like many business owners, without the staff, the business wouldn’t function. Having access to well-trained staff from day one will certainly make it easier to get started.
8 – Less risk / Different focus of energy
When starting a business, it takes time to get everything set up, establish yourself in the market and start to gain traction. You will find yourself spending your energy around decisions like “what CRM should I use?”, “which EPOS system fits my needs?” or “how do I get my accounting software to sync with XY or Z?”.
When acquiring a business that has made all the classic mistakes and lived to tell the tale, you significantly reduce the risk of failure. Also, you get to spend your time making what is there already better, not mithering over the smaller decision.
Conclusion
Starting a business is fun, we get it. I’ve done it and would be tempted to do it again given a very specific set of circumstances. I truly believe that purchasing a business gives you a stable platform to grow the business further.
Yes – you will have to pay something for goodwill, but this small premium is negligible on the scale of the problem.
Complete transparency: I run a business brokerage, which focuses on selling businesses. Why not check out our website and see if there is a business there that ticks your boxes, and save yourself lots of time and energy.
