Member Article

Why start a business when you can buy one?

The dream of owning a business will, for many, remain just that.

The risk-averse are understandably hesitant about starting a business given the endless negative statistics that surround the subject.

You don’t need to look far to find a harbinger of doom: recent research by British commercial insurer RSA found that more than half of new businesses will fail within the first five years.

For those with families to support and mortgages to pay this claim is worrying - and reason enough to put the dream on a backburner. Yet there is a less risky way to be your own boss – by buying a business, rather than starting from scratch.

Here are our top reasons for buying an existing business:

Income from day one

Starting a business means that there will be an initial period where you don’t generate any income at all. This could be anything from six months to years in some cases, during which time you will still have expenses such as the premises itself, licences, wages, initial stock and materials, equipment and legal and professional fees. Such an unrewarding start to a business can be pretty demoralising.

When buying a business, one of its key selling points will be projected income and a good ROI (Return on Investment).

A savvy buyer will find an enterprise in which they can hit the ground running - and with a steady income from the outset there will be the freedom to re-invest money into developing the business and realising a few of those dreams!

Established brand

With an existing business you are buying into a recognisable brand with a track record, complete with all the trademarks, copyright and websites associated with it.

This gives customers, suppliers, lenders and other contacts a confidence in your business that they may not have when interacting with an unknown start-up.

Trained employees

When acquiring an established business you are also buying into the people involved. The seller will have taken time to find, train and develop their employees – meaning less work for you, as long as they’ve been successful in employee retention.

Less risk

There is certainly less financial risk for both the lenders involved in buying the business, and the potential business owner. If the business is already doing well, it should continue to do so.

When you decide to invest in a business you will also be able to check the historical revenues, enabling you to determine the likely future cash flow. In turn, this shows how you will be able to support your purchase of the business.

Existing customer relations

One of the most challenging aspects of starting a business is building up your book of contacts. A reliable small business for sale will often have a number of regular suppliers, leads and loyal customers.

Convincing potential customers to shift their loyalty over to your business is difficult when you’re a start-up, and will take a lot of time. Therefore an already-established network of contacts and customers who already visit the business on a regular basis is invaluable.

Less graft

A start-up is all-consuming. There is so much to achieve and so much at stake that it’s hard not to work all hours to get if off the ground.

Many find that their initial passion begins to fade as their eye-bags get heavier. And you can’t run a business without passion.

Taking on an established enterprise will likely mean inheriting streamlined business practices and often employees who already know the ropes.

Take a look at what businesses are for sale in your local area and you might just be able to achieve that Holy Grail: being your own boss with a healthy work/life balance!

If you really want to own a small business, don’t overlook the possibility of buying one: it could be the most financially sound way for you to be your own boss.

By Rose Hill, online journalist for BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Rose writes for all titles in the Dynamis stable including PropertySales.com and FranchiseSales.com.

This was posted in Bdaily's Members' News section by BusinessesForSale .