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Does Buying an Existing Business Minimize Risk?

Posted by webtech on July 28, 2014
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Business partners negotiating contract
When you are seeking to venture out into the business world on your own, there are some potential risks involved that must be considered. However, these days there are distinct and definite ways prospective business owners can minimize these risks. One of the most effective ways is to work with an idea that is tried and true.

But how does one do that, yet still remain unique and innovative enough to maintain a competitive advantage? The answer is simpler than you might think: buying an existing business.

Types of Existing Businesses

There are many ways to approach acquiring an existing business operation. There are a wealth of existing businesses that are for sale right now. Every day there is another existing business going on the market that you can take advantage of from main street retail to service to distribution to manufacturing businesses and many franchise resales in prices ranging from <$100,000 to several million dollars. Generally seller or 3rd party financing is also available.

Reduction in Start-up Costs

Purchasing an existing business also makes financial sense as compared to starting your own business from the ground up. Start-up costs for new businesses can be prohibitively high. Whether it’s the cost of researching a new business model and the associated competition, or the expense of purchasing the land and erecting the physical structure for the business, the costs can add up quickly. And so, therefore, does the risk. When you purchase an existing business, someone else has already done the research and erected that building. As a result, you do not have to worry about the extra costs of planning and building a business location in addition to the other costs involved.

More importantly, an existing business operation serves as proof that the enterprise can be successful. Start-up costs for a currently operating business in almost every case will be lower than the capital required to start that same type of business from scratch. In many cases, existing business are sold as “turnkey,” meaning the business is ready to go as soon as you sign the paperwork.

Your Own Personal Business Advisor

Existing business also holds the potential for perhaps the most valuable commodity in business today: a seasoned expert in the field. The previous owner of the business you’re looking to acquire has built an incredible database of valuable information about how the business runs. Annual reports may tell only so much, but sharing a cup of coffee with the person who was ringing up the sales firsthand can yield immeasurable returns for you.

Going into business for yourself always involves risk. It’s part of the process. But doing everything you can to minimize that risk is good business sense. Although purchasing an existing business may not be a perfect fit for every business model, it nonetheless is a sound financial decision that represents a tangible way for you to reduce your risk.

Sunbelt Business Brokers, Atlanta, can help you every step of the way from finding the right acquisition to fit your passion and pocket book and can guide you through the purchasing process to submitting an offer; arranging financing all the way to the closing table.

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