Top 6 Reasons to Buy a New Business Vs Starting a Business
There are several reasons to buy a business versus starting a business. Here are a few:
1. An existing business can be financially predictable- A business that has been around for at least 2 years has a track record. The future expenses, cost of goods sold, employment expenses should have some correlation to the past years.
2. Financing is more readily available- Banks are strategic betters. They like to “bet” on ventures that are proven instead of new concepts. Statistically businesses that have been profitable for more than two years are going to continue to be profitable – or at least have income.
3. You can replace your income- When you buy a business you can potentially predict replacing your current income. Most business buyers are what I like to call “job buyers.” These are people who are looking to replace their current job with a new income and a new position.
4. An existing business should have sustainability-The businesses should already have existing policies, procedures, and employees. All of these elements will help you to sustain the business without the massive effort of starting a new business.
5. Starting a business takes a lot of energy to start- Starting a business is difficult and people frequently fail due to undercapitalization, poor planning, or misconceptions about owning a business. However, undercapitalization, poor planning and unprepared entrepreneurs are major reason on why business acquisitions fail. The big difference is that for the first year of starting a business you are just starting a business. You have so many things to worry about that you aren’t able to focus on making money. When you buy a business you can use your time effectively.
6. Current economic conditions favor business acquisitions right now but deter business startups- While I write this article we are having major financial issues as a country. Starting a new business today is like starting a new business in the great depression. Buying a business is an excellent time because businesses are selling for the lowest prices they’ve seen in over two decades! That means there is great opportunity for people who are prepared.
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