Every year, hundreds of thousands of entrepreneurs begin their journey into business for the first time. Many businesses start every quarter, but almost as many businesses meet their demise. Starting up a new company (building something from nothing) is a huge undertaking with a significant failure rate. Fortunately, there is another way to venture into a business that can provide many benefits, including a lower risk of failure for the first-time entrepreneur.
Buying an existing business is a great way to get started and, right now, as baby boomers are retiring, the market is well-positioned to take advantage of the increasing amount of businesses continuing to hit the market year after year.
The Benefits of Buying an Established Business
A currently operating business will have an established customer base. You won’t have to speculate where the clients will come from, you should have historical data that will help you know what to expect, and real customers will be coming to your business from day one.
Sometimes establishing relationships with key partners can take years. But if you are buying up instead of starting up, those important pieces of your business are already in place.
More Money Now
Experienced entrepreneurs often say that it can take three years before a new business starts to make money, which can be a real problem for many people. A great advantage to buying a profitable, established business is that not only are you making money right out of the gate, but you can estimate the expected cash flow based on your new businesses’ past performance.
Obtaining financing for an existing business can often be easier than raising money for a startup. As the business has a track record of making money, bankers are often much more comfortable lending to someone who can show that their business has the ability to service debt.
Time to Focus
Because your newly acquired business is already up and running, more of your time can be spent on improving the business. Your entrepreneurial drive can be focused on the important parts of the business, instead of being weighed down by all the details of building everything from scratch.
Finding The Right Business
If you are interested in purchasing a business, The FBB Group can help. We maintain an inventory of businesses for sale, as well as offer Retained Buyer Searches that can assist you in finding a business. Contact us today to discuss options to help you meet your goals and objectives.
The majority of our business is derived from referrals. Please consider referring our services if you encounter a situation involving the potential purchase or sale of a business.
Ronald V. Chernak
Inspiring business relationships since 1982!
(originally published in the April 2018 eNewsletter)