If you’re looking impartially and unemotionally at the options ahead when starting your own business, you have to admit buying one already in operation is very appealing. Not only do you get experienced staff and an existing customer base, you also get established premises, a well-known brand and a network of suppliers.
Within a few years of starting up, the majority of small businesses have closed for one reason or another, which means buying a well-established business should give the buyer some assurance they’re buying an already tried and tested business model that works.
Plus, when you buy a business as a going concern you don’t have to deal with start-up paper work, such as registering for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS) and meeting any state-level requirements for new businesses.
Other advantages include the following.
It’s important to identify early if there are any staff morale issues that need addressing, or if staff are resistant to new ownership and the changes this might bring. Talk to your staff and find out if they’re happy in their roles, if there’s anything that would help them do their jobs better, and what concerns they might have about a new owner coming in.
Showing staff you’re interested in them and open to discussion should help to ease any worries they may have, particularly if they have strong loyalty to the previous owner.
A good business should come with tried and tested processes that allow daily, weekly, monthly, and annual tasks to be carried out as efficiently as possible.
You’ll save time, money and energy by not having to develop these systems yourself. You’ll also be able to improve the systems if needed, with the ground work having already been done for you.
A major advantage of buying an existing business is that you inherit its market, or customer base – particularly if you buy a franchise or well-known company.
Along with a recognized brand and business image, you’ll also inherit a good reputation. This is a key point to be aware of when thinking about buying an existing business. If a business has a history of poor service or selling second-rate products, it might be difficult to convince customers that things will change under your ownership.
While buying an existing business usually involves a greater initial financial outlay than starting a small business and growing it gradually, there are some peace of mind advantages that come with it.
All up, there are many advantages to buying an existing business if you can find one well-priced that interests you. It’s always important to be sure the business you’re considering is right for you, and to learn as much as possible about its financial status, history, value, strengths and weaknesses before committing to purchase.
© Comerica. For more content like this, please visit smallbusiness.comerica.com