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6 Reasons Why Purchasing an Established Business Is Better Compared to Starting One

0
  • by Gavin
  • In Best Practices · Technology
  • — 31 Oct, 2018

If you are thinking about being your own boss, the first question which you should ask yourself is whether you should buy an already established business or if you should start one from scratch. There are advantages and disadvantages of buying a company and starting one from rock bottom. Buying businesses has many benefits as compared to starting one on your own. Let’s look at some of the reasons why buying a company is better than starting one from scratch.

1. Easy to secure funds

Most lenders and the majority of bank institutions prefer to lend funds to a business which is already established as compared to a start-up business. Their argument is that it is less risky to finance a company which has a proven track record of generating income and profit than a business with an uncertain future.

2. Established brand

Another reason why it’s better to buy a business rather than start one is that an established company already has an established brand. When you purchase an existing business, you will be purchasing a brand which is recognizable and that has a proven track record. This is inclusive of all the trademarks, copyrights and the websites which are associated with it.
Purchasing a business which has an established brand gives your suppliers, customers and lenders confidence in your business which they can’t have with a start-up business.

3. Defined cash flow

Purchasing an existing business will assure you of a defined cash flow. Before buying the company, you can go through the financial records and determine how much money is going in and out of the business.

With a starting business, you won’t be sure of how much income it will generate. This might make it a bit difficult when you are trying to figure out how you will be paying your business and personal expenses.

4. Established personnel

A successful business is determined by the people who support and populate it. Starting your own business from scratch means that you have to find your own employees to work with. Finding the right employees is a hard task, and it is much more than just going through resumes. A resume reveals a small portion about the candidate. A resume does not reveal whether the person will be the ideal candidate and it also does not tell you whether the person will love their job.

5. Established relationships

An established business comes with established relationships. Having problems with the supply chain can lead to an end of your business. Many companies have collapsed because of unsolved problems with the supply chain. An established business can pinpoint the reliable supply chain to work with.

When buying an established business, you know that you are acquiring a business which has a solid foundation and it can provide cash at a given period. Also, you will have ready customers who already know your brand, know where the company is located, and how they can buy from you. This is especially important when you are looking at businesses in a local area.

6. Focus on the growth of the company

When you are starting a business from scratch, you have to use all your energy and time in getting the business off the ground. This process can both be exhausting and time-consuming. On the other hand, when you buy an existing business, you will only need to put your energy into the growth of the business and the parts of the business which need the most attention.

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Tags: defined cashestablished brandestablished businessexisting businesssupply chain

— Gavin

A Web addicted Geek stuck inside Tron.

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