Why buy an existing business?

Choosing to run your own business is one of the biggest steps you can take in life. It should also be one of the most exciting.

Building a start-up from scratch is, however, far from easy and the failure rate is high. Although taking over an existing business is no walk in the park, many of the initial risks have already been taken for you.

Suppliers, employees and customers are in place and, depending on the type of business, stock may also be included in the sale.

Cost and cashflow

Of course, it usually costs more to buy a business than to set one up from scratch. At least, it does on day one.

However, relatively few start-ups have any kind of meaningful cashflow for weeks or even months, during which time you will still be incurring business expenses as well as your own day-to-day living costs. It could easily be six months to a year before your new venture starts contributing to the household finances.

If, by contrast, you pay a fair price for a going concern it ought to generate a profit from the day you receive the keys to the door. So, although the up-front costs of acquiring a business can look higher, the real cost to you may be lower over the medium term.

Staff

If you buy a trading company, as opposed to just property and stock, you will usually be required by law to continue employing any existing staff and honour their terms and conditions. If you are buying a going concern then you will usually want to take these staff on anyway.

Hiring the right people is difficult, particularly if you have never done it before or are moving into a new sector. If the vendor has already done it for you, and the staff have proved themselves, then you will have saved yourself a lot of time, expense and potential pain.

Suppliers

The vendor may or may not have negotiated fabulous deals with suppliers. However, assuming the business is making a profit, whatever deals they have done are likely to better than those that would be made by – or, in many cases, available to – an unproven start-up entrepreneur.

Confidence on the part of suppliers is important. If you acquire an established business you also acquire at least some of its track record, which will stand you in good stead when negotiating your own deals.

Customers

A business without customers is not a business. A profitable going concern has overcome the first hurdle – getting enough trade through its doors to pay the bills.

This means you can focus on increasing your profitability, making more money out of existing customers, attracting new ones and introducing new lines of business. This is the fun stuff that makes the difference between a business that is surviving and one that is thriving.

To find a business for sale that works for you, and your budget, call Blacks Business Brokers on 0333 370 0000 or visit www.blacksbrokers.com