The Pros and Cons of Buying a Business
For some entrepreneurs, buying an existing business is a whole lot easier than trying to start a new one.
You may have the cash – but there are other considerations to take into account.
Pros
By buying an existing business, you can start your operations immediately. Depending on how good the company’s sales are, you may already have a good customer base.
Here are some of the pros of buying an existing business:
- No need to find new vendors
- Some of the existing staff may stay on, and you will not have to hire new employees
- If the company’s reputation is very good, you will benefit in the form of loyal customers
- Easier Financing – these days, banks are more likely to lend money to small businesses with a track record
Cons
As with everything in life, buying a business has a few downsides:
- Brand Reputation – The business may have a bad reputation that is difficult to overcome
- Previous Agreements – You may have to honor agreements that were signed by the previous business’ owner – even if you don’t want to
- Business Model – it may be different from what you envisioned, and you may have to make some major changes in the way the business is run
There are many companies that specialize in helping entrepreneurs purchase existing companies – for a fee. But the cost of using a broker to buy a business may be well worth the time and energy you will spend doing due diligence.
Even if you decide to use a broker, make sure you enlist the services of an attorney well-versed in business law.
