Entrepreneurship Through Acquisition
The Benefits of Buying a Business vs. Starting One From Scratch
...If you know established small business owners who might be considering retiring, switching occupations, or are simply "tired of doing this," ask them if they would consider selling to you.
You’d be SURPRISED at just how many would be interested in handing the reins over to you for a reasonable offer!
The post-COVID culture has marked the day of the entrepreneur. Only days after being forced to work from home for the purposes of pandemic social distancing, people began to say, “Hey… I like this!” The ability to get up, put on a pair of sweats, cook a little breakfast, sip their coffee slowly, and then power up their computer from the comfort of their own sofa with their favorite pet lounging closely nearby while doing their work and earning their pay gave people a taste of freedom – the kind that many entrepreneurs enjoy as a lifestyle.
Not wanting to give up their lifestyle of freedom to jump back into their work clothes, back into traffic for a commute, and back into someone watching them clock in and clock out at the end of a long workday has more and more people considering starting their own business as a means of maintaining their lifestyle of freedom. But while most of ask, “What kind of business should I start?” others, who think more broadly, are asking a different question: “Should I buy a business rather than starting one from scratch?”
It's a smart question but one not often considered by aspiring entrepreneurs. Rarely does it cross one’s mind that there are entrepreneurs out there who have built successful businesses, established strong brands, and have a loyal, existing clientele, but for one reason or another, are ready to get out of the biz. However, rather than close the business and let all of the value they’ve built up in their brand go to waste, they are willing to sell it to someone else.
Most people do not realize that there are whole organizations and marketplaces where people can go to buy, sell and trade businesses. The businesses featured on them are both large and small, solopreneur and multi-employee operations, older and newer businesses, and from every industry imaginable. For the aspiring entrepreneur, opportunities abound to purchase a business rather than starting one from scratch. Even better, some are listed for as low as $30,000, which is a less than many people invest when starting a business from scratch.
But what are the benefits of buying a business rather than starting your own? There are several.
You don’t have the headaches of a startup.
Starting a business can be hard, so hard, in fact, that many people don’t even survive the startup process. There’s solidifying the idea, doing a feasibility study, developing a logo, website, ecommerce platform, and marketing materials, building a team of support employees or contractors, and figuring out how to effectively run the business in order to make a profit and be viable. Then, there’s just the stressful day-to-day mental challenges of wondering whether the business is going to make it or not. Buying a business allows you to skip this phase of business building and step right into a proven, established company that has already demonstrated a measure of success.
The business brand is already established.
If the business has been operating over a span of time and already has positive public awareness and perception, that’s less work that you have to do in building its brand. A lot of strategy, investment and hard work go into building a business brand. When you purchase a business, you step in and reap the rewards of the hard work that has already been done to accomplish this goal. Once you are the owner, rather than establish the brand, you’ll only need to grow it, and growing it is a lot easier than establishing it.
The clientele typically follows the business.
Among the difficulties of starting a business is establishing a clientele. This is a challenging process because it involves getting people to trust both the business and the business owner. It also involves convincing people to switch from the product or service provider that they formerly used to a new one, and this is no easy feat. Building a clientele is another one of the hard things that startup owners have to do. Fortunately, if you buy a business, rather than having to build your own clientele, the clients of the business typically remain when it transfers to the new owner.
As long as you ensure that you maintain the same quality of products and services, chances are, they’ll be as loyal to you as they were to the previous business owner.
The systems, internal processes and vendors are already in place.
Developing clear, programmatic systems and processes for operations and ordering are not everyone’s thing. One cannot take for granted how much work goes into planning out exactly how things should work for the smooth, efficient functioning of the business. It takes a lot of planning, trial and error to get systems right. Then, once systems are in place, it takes a great deal of refinement and tweaking for all of the systems and processes to work together. When you buy a business, you don’t have to figure things out for yourself.
In most cases, you’ll receive a complete owner’s manual that details all of the systems, processes, vendors, and technologies that are used to run the business as well as the details on how to make them work. That’s a big win for you. <
br> You can finance the purchase of an existing business.
Most people do not realize that while lenders are less likely to release funds for the startup of a brand new business, they are a lot more likely to finance the purchase of an existing business. If the business owner can provide records showing a track record of consistent cash flow and profitability, there are a lot more lenders willing to provide some great financing options to help you take over the business.
You have a better chance of succeeding.
When you start your own business, it’s a crap shoot. There’s a 50/50 chance that your business will succeed, and while you hope for the best, you know the statistics. However, when you purchase a business that is already successful, you significantly decrease your odds of failure, because the business has already proven its capacity to succeed.
As long as you follow the playbook that was provided by the previous owner and accept any training and support that they provide you as you get acclimated to the business after the sale, the same success they experienced can be in your future!
Interested in exploring your options for buying a business (or selling your own)? Simply do a Google search for “Local small businesses for sale,” or check out sites like bizbuysell.com, loopnet.com, us.businessesforsale.com/us/, and the many others that list businesses for sale.
Here’s another great tip: if you know established small business owners who might be considering retiring, switching occupations, or who are simply "tired of doing this," ask them if they would consider selling to you. You’d be SURPRISED at just how many would be interested in handing the reins over to you for a reasonable offer!
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