Two of the focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. To get into the business world, you can either start you own business from scratch, or you can buy into an existing operation. There are advantages to both though there are unique conditions for buying into an existing operation. The following contributed post is entitled, The Benefits of Buying an Existing Business.
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Launching a new business can be exciting but buying an existing business can be a better way to guarantee success. As well as having the opportunity to enhance and modify the business, you’ll have the benefit of taking on an existing client base. With clients already acquired, you won’t be starting from scratch, and your company should have a healthy turnover you can rely on.
Existing cash flow
Having an existing cash flow is a major advantage of buying a business. Entrepreneurs who choose to start a business can’t always take an income from the business for months, or even years. With such small margins and limited resources, starting a new business requires financial investment and an ability to survive without drawing an income.
In comparison, buying an existing business should give you the opportunity to take a salary straight away. Providing the business has set its prices right, the income from sales should ensure you can cover the company’s outgoings, take a salary for yourself and have the finances to reinvest and grow the business.
Obtaining funding
If you want to expand your business or invest heavily in a certain area, buying an existing organization can ensure you get the best funding opportunities. Whilst commercial lenders can be hesitant about lending to new companies, an existing business will have a proven track record, up-to-date accounts, and a cash flow to confirm that its debts can be covered.
With this information, lenders are more likely to view the business favorably. As a result, you should find it easier to borrow money when you’re managing an existing business, and you may even get better rates and repayment deals too.
Buying a brand
A brand can be as valuable as the actual business and having a recognizable company name is valuable. Buying a business which clients already trust is extremely advantageous, and it could serve you well in the future. Generally, companies spend years cultivating their brand, so being able to buy an existing business with an established brand name is a major benefit.
Furthermore, if the previous owners have networked with other members of the business community, their hard work won’t be wasted. In fact, your company will benefit from any work which has been done to establish its brand, and you’ll reap the rewards going forward.
A trusted brand also makes it easier to network with clients in the future, as the company’s track record and reputation will precede you. With brand recognition, you’ll find it easier to secure meetings with potential targets and your sales could increase significantly as a result.
Professional expertise
When you buy an established business, you don’t have to handle things on your own. With a range of dedicated business support, you can find the right business and sector for your talents and secure the best opportunity when it arises. By using manufacturing business brokers, for example, you can find the right sale opportunities within the industry and be ready to act.
Business brokers have in-depth knowledge of the market and what it takes to acquire or take over an existing organization. By working with brokers, you can ensure your business purchase is conducted safely and securely, as well as efficiently and cost-effectively.
Maintaining relationships
When you buy an established company, you’ll have the benefit of the existing customer base. In many cases, vendors are willing to help transition clients to the new owner and this can help to ensure client retention as you take over the business. Providing you can offer the same or better level of service, it’s likely that the company’s clients will stay with you, which will ensure the firm’s turnover doesn’t drop.
Acquiring clients can require a lot of time and resources, which is why start-ups take such a long time to turn a profit. When you buy an existing business, however, you have an established client base at your fingertips.
Building your workforce
For any business, your staff is one of your biggest assets and locating the right people can take a while. When you purchase an existing business, however, you’ll have the option of retaining existing members of staff. With knowledge of the company and the industry, these employees can be integral to the running of the business, as well as its growth and expansion. Knowing you have reliable and knowledgeable staff members to rely on can be a major benefit of buying an established business, and one which will help you to maximize profits in both the short and long-term.
