Thinking of buying an existing business? The evidence is clear: your chances for success are best when you purchase an existing business or franchise resale. However, I encourage you to review the following list of pros and cons, as taking over an existing business is not ideal for every would-be entrepreneur.
The pros of buying an existing business:
1. The business is already up and running
2. The business is likely to have an existing base of customers, employees and suppliers
3. There exists a tried-and-tested business formula, one that you can emulate (or at least a baseline to improve upon)
4. The previous owners are likely to lend support and goodwill
5. Generally speaking, the chances for success are better than starting a similar business from scratch
6. It may be easier to obtain outside financing because of an existing track record.
And now for the cons:
1. A large investment is often required
2. The loss of an owner or manager may lead to a disruption of operations
3. There are costs associated with business transfer: solicitors, surveys, accountants, etc.
4. It will take time and possibly travel to research available opportunities
5. You might inherit inept employees, or employees who are loyal to the previous owner, but not you
6. The present location might be limiting. You may be locked into existing policies and practices of the business, at least for the foreseeable future.
Purchasing an existing business could very well be the smartest thing you’ll ever do. Just be sure to arm yourself with plenty of knowledge going in. It’s what any savvy business person would do – and I’ve got a feeling that’s you.
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