Thinking of Buying a Business?
Posted on June 4, 2013 by nchadmin
Some entrepreneurs dream of owning their own small business. Maybe you love cars and you’ve always wanted a repair shop. If gift baskets are what you do best, you could have a business that prepares them for all occasions. When you make your business plan, you start to realize everything that goes into starting a business. You have to find space and negotiate a lease; purchase equipment, computers and software; build up a customer base; and navigate zoning, licensing or other government and legal requirements.
Then you start to notice existing businesses for sale in your area of interest. Should you buy one of these? There are many advantages.
Startup costs are much lower. An existing business will have most or all of the equipment you need. It may also come with inventory. You won’t have to spend time or energy building out the space. You don’t need to put out a massive advertising blitz to let people know you’re there.
The business has a location. You won’t need to look for space and, if you’re lucky, the space will have time left on the lease. You won’t have to worry about negotiating your rent for a while.
The cash flow is already there. Money is already coming in. You won’t have to go through those long months of wondering whether you can build your business up enough to make it. (If the cash flow isn’t there, you need to take a long, hard look at why. If you can easily identify the reason and know how to fix it, great. If you can’t, then stay away.)
The customer base is already there. An existing business should have a base of customers who are accustomed to coming to that location and buying the products or services available there. Some of them won’t like the transition to new ownership, but most of them will give you a chance.
The business may come with employees. Like the customers, most employees will stick around to see what kind of boss you are. Employees are sometimes an unwanted gift. Make sure that you weed out those who don’t meet your standards of quality work, ethics and customer service.
The business has a track record. If the existing business has been successful in that location for years, at least you know that a demand for your product or service exists. You can look at the books and get a feel for the factors, both positive and negative, that may impact your future plans.
Remember, your plans are just that – in the future. No matter how well or how poorly the existing business has done, that is all in the past. It’s now up to you to make or break your new business.
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