Why Start a Business When You Can Buy One?

Many of us dream of starting a business and becoming masters of our own destinies.

However, with the endless negative statistics on start-up failure rates, it’s little wonder that we put those dreams aside and go back to the day job.

While the vision of a buzzing artisan coffee shop or bijou boutique may be pretty, the stats are not: the most recent harbinger of doom is Forbes.com. In a recent article, they claim that 90% of start-ups fail.

For those with mortgages to pay and families to feed this claim is worrying—and reason enough to shelve the dream. But there is another way.

Buying a business, rather than starting from scratch will mean you are still your own boss, but with a lot less risk.

Here are our top six reasons for buying an established business:

Instant Cash Flow

When you start a business, it can take anything from six months to years (in some cases) to generate profit and throughout this time you will still have to pay for essentials such as rent, licenses, wages, stock and materials, equipment and legal and professional fees.

This can be pretty demoralizing when you are working all hours.

If you purchase an existing business, one of its key selling points will be the projected income and a decent Return on Investment (ROI).

Related Article: 5 Things to Consider When Buying an Existing Business

If you are confident you have found a business in which you can “hit the ground running,” then you will have steady income from the start—and this means you will soon be in the position to re-invest some of that money into developing the business into the one you were dreaming about!

Established Brand

Never underestimate the power of brand recognition. If the business you are buying is known and respected in the local area, you will reap the rewards from your predecessor’s hard work. Just make sure your deal includes registered trademarks, copyright and websites associated with the business.

With the instant kudos of an established brand, you will have the immediate confidence of customers, suppliers, and lenders, which would not be the case if you were an unknown start-up.

Experienced Staff

When purchasing an established business, you are also buying into its people.

Existing employees will care about the business and you can make the most of their experience and insights from day one.

Just as it takes a while to build up relationships with customers and suppliers, it also takes time to build a trusted team.

If those people are already there for you, you will have more time to focus on the future as well as the reassurance that if you need to take time of work for any reason, there are competent staff who can run things for you.

Less Risk

Firstly, from the point of view of lenders, there is certainly less financial risk in backing an established business with a proven income than a start-up.

You will find you have a lot more friends in financing when you have a healthy Profit and Loss (P&L) statement to show them.

And, as the buyer, you will have access to the business’s historical revenues (usually during the Due Diligence process of the deal) which will enable you to predict your future cash flow and inform your decision as to whether the whole enterprise is affordable.

Current Customer Relations

The hardest part of starting a new business is building a strong customer base and trusted contacts. A solid small business will likely have a number of regular suppliers as well as leads and loyal customers.

Persuading consumers to shift their loyalty over to your business is a huge hurdle for any startup, and moreover, takes a long time.

The pre-existence of considerable goodwill in a business is an invaluable asset—and worth searching for.

Less Stress

Last, but by no means least, is that all-important work-life balance.

Ask any entrepreneur: a startup is all-consuming. So much is at stake when starting a business from scratch and, with a to-do list as long as your arm, it’s nearly impossible to work less than 24 hours a day!

The initial passion that begun with the business idea all too often fades when exhaustion sets in. And you can’t run a business without passion.

Taking on an existing enterprise will ensure that you are inheriting business practices that work and employees who know how to maintain them. This will mean you have more time to think creatively, as well as enjoy your profits in your spare time.

Have a look at the businesses for sale in your local area and take that dream off the shelf!

Author: By Nicky Tatley, Chief Writer at BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Nicky writes for titles across the Dynamis stable, as well as a number of other industry publications, both print and online.