Why buy a business, buying a business

Buying a business is always easier and much less risky than starting one from scratch.

According to statistics, a large number of start-up businesses will fail, and those that survive are often sold to have their new owners make the real gains. There can be some lean years in developing a start-up business, and it can be a long time before you can draw a decent salary. So let the hardened entrepreneurs take the risk, develop the market, and find out what works and what doesn't.

So why buy a business?

In buying a business there are a number of advantages to buying a business that is operating as a going concern. Firstly you will get to see how much the previous owner has been able to draw as a salary from the business, what the profits are and any other benefits that may come from owning this business entity.

You will also know how much you will need to commit to buy the business; the business will have a price tag, unlike a start-up where businesses often run short on funding and can consume much more than anticipated, causing the eventual failure due to burning too much capital before the returns kick in.

There's no reason why in buying an existing business it can't reflect your style and ownership, and be pointed in the direction you want under your vision. During the first year of ownership it might be steady as she goes to consolidate your knowledge and business base. Thereafter you can make your own improvements, implementing the vision you have for your new business.

In buying an existing business you are getting;

(1) An existing customer base - People or businesses that already do business with you, meaning cash flow from day one.

(2) Accepted products and/or services - These have already been developed and accepted into the market place.

(3) Existing employees – Skilled and experienced staff who understand the business and its customers are extremely valuable to any going concern.

(4) Operating Systems - Key for any business activity. How the business operates, what keeps the cash flowing and the customers coming, tying everything together. It's your business formula developed by the previous owners; it may be perfect, or it may need major changes.

(5) History - Showing the company's performance and providing you with a platform on which to build. The previous owner has operated this business and will be able to show you the financial records, cash flow, sales and expenses, all of which reduces the risk to you and your bankers.

Before looking to buy a business decide what you want, what your objectives are, and understand your strengths and weaknesses. There are risks associated in buying a business, plan the process and seek professional advice to help in getting it right.

Check out some of these top business buys:

Businesses for Sale Melbourne
Businesses for Sale Sydney
Businesses for Sale Gold Coast
Businesses for Sale Brisbane
Businesses for Sale Australia

 

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