10 Reasons to Buy a Business Instead of Starting a New One

Buy an Existing Business

Read the full article at: www.inc.com

Many of us have dreams of starting our own business, but it’s easier said than done. Studies have shown that between 60 and 90 percent of startup businesses fail within 5 years, and most startups fail within the first two years.

Yet, if you buy an existing business instead of starting one from scratch, you have a much better change of succeeding as an entrepreneur. Here’s why:

1. Existing businesses have actual financials. Compared with startups, which rely upon pro forma budgets, existing businesses are more able to gauge future earnings and develop an accurate financial picture.

2. Existing businesses have immediate and predictable cash flow. The new owner of an existing business can immediately rely on projected revenue for its operations, payroll, and debt service. Startups have to wait months or even years before there is enough cash flow to cover these costs.

3. Existing businesses come with a trained and skilled workforce. A skilled workforce can be a business’s most valuable asset. Many startups take months to recruit a team of skilled employees and then train them before they can be fully productive.

4. Existing businesses already have established suppliers and credit lines. It takes time and effort for a startup to establish relationships with suppliers and be approved for credit lines.

5. Existing businesses have an established base of customers and referrals. Startup businesses have to spend time and effort introducing themselves to customers and convincing them to do businesses with them.

6. Existing businesses already have many of the necessary licenses and permits. Licenses and permits are essential for operations and obtaining new ones can take weeks or even months.

7. Existing businesses have growth strategies. They’ve already moved past the startup phase and it’s not uncommon for an established businesses to provide the new owner with a documented growth strategy.

8. Existing businesses are easier to finance. Unlike startups, existing businesses have a history and a proven track record. Banks are more inclined to approve loans because they can base their lending decisions on actual results. This important because in many instances, entrepreneurs rely upon seller financing in order to close the deal.

9. Existing businesses offer a better work-life balance. Launching a new business can be all-consuming requiring you to work long hours. If you enjoy your leisure time with your family, buying an existing business might be a better option.

10. You can buy a successful business right now on BizBuySell. Search from over 45,000 businesses for sale right now, including restaurants, retail, business services and manufacturing. Many of these opportunities include seller financing.

Not sure how to get started? Buying a business is a big decision. Not only do you want to make a successful purchase, you want to buy a business that’s right for you. Download a free copy of BizBuySell’s Guide to Buying a Small Business.

“Starting a business from the ground up is difficult. To greatly increase your chances of success, consider buying a business and building on an already established brand.”

2 Comments on 10 Reasons to Buy a Business Instead of Starting a New One

  1. Considering that most businesses fail within the first five years, buying a business is a great way to beat the odds of failing. Its a great way for a professional to get into entrepreneurship. Good article.

  2. Existing businesses are more bankable by lenders…startup financing is a tough way to go.

    SBA loans for acquisition and working capital.

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