BUYING A BUSINESS
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Buying a Business
Many find the idea of running a small business appealing, but lose their
motivation after dealing with business plans, investors, and legal issues
associated with new start-ups. For those disheartened by such risky
undertakings, buying an existing business is often a simpler and safer
alternative.
Advantages
The main reason to buy an existing business is the drastic reduction in
start-up costs of time, money, and energy. In addition, cash flow may start
immediately thanks to existing inventory and receivables. Other benefits
include pre-existing customer goodwill and easier financing opportunities, if
the business has a positive track record.
Disadvantages
The biggest block to buying a small business outright is the initial purchasing
cost. Because the business concept, customer base, brands, and other
fundamental work has already been done, the financial costs of acquiring an
existing business is usually greater then starting one from nothing. Other
possible disadvantages include hidden problems associated with the business
and receivables that are valued at the time of purchase, but later turn out to
be non-collectable. Good research is the key to avoiding these problems.
Review this valuable course: Entrepreneurship: Starting & Managing Your
Own Business
Many find the idea of running a small business appealing, but lose their
motivation after dealing with business plans, investors, and legal issues
associated with new start-ups. For those disheartened by such risky
undertakings, buying an existing business is often a simpler and safer
alternative.
Advantages
The main reason to buy an existing business is the drastic reduction in
start-up costs of time, money, and energy. In addition, cash flow may start
immediately thanks to existing inventory and receivables. Other benefits
include pre-existing customer goodwill and easier financing opportunities, if
the business has a positive track record.
Disadvantages
The biggest block to buying a small business outright is the initial purchasing
cost. Because the business concept, customer base, brands, and other
fundamental work has already been done, the financial costs of acquiring an
existing business is usually greater then starting one from nothing. Other
possible disadvantages include hidden problems associated with the business
and receivables that are valued at the time of purchase, but later turn out to
be non-collectable. Good research is the key to avoiding these problems.
Review this valuable course: Entrepreneurship: Starting & Managing Your
Own Business