Buying an existing business
vs. Starting a new venture
Want a better way to maximize the probability of success in the buying advantage?
Then review actual operating results rather than projections.
If a business has been successfully owned and operated by the same owner for a number of years, and if that business has been the source of income for his/her family, you can be reasonably sure that the business will be viable long term. There are significant advantages to buying an existing business versus starting a new one:
Immediate cash flow. No expensive advertising to lure customers – the cash register starts ringing the first day you take over, just like it did for the seller, the day before.
Trained employees. When you take over the business, you will have a complete crew of trained employees to run the business with no down time for training and no customer dissatisfaction with untrained employees.
Established suppliers and credit. For the most part, existing suppliers will continue to do business with you without missing a beat. Remember that they have been supplying the company for a while and they do not want to lose your business.
Established customers and referral business. Your customer base is already in place and accustomed to doing business with your company. Assuming you continue to deliver the same (or improved) levels of service, they should refer additional customers your way.
Existing licenses and permits. Usually, all you have to do is transfer the licenses and permits to your name. In those cases where you have to re-apply for a license or permit, you have the comfort of knowing that the business, in its current location, was previously approved.
Training by the seller. In addition to the trained employees, you will receive training from the seller on how to operate the business. You will be introduced to customers and suppliers and will get the benefit of the seller’s extensive experience in running the business. You will not have to make the same mistakes the seller made!
The availability of owner financing. Over 90% of the businesses sold by BC Business Brokers have a portion financed by the seller of the business. This may be the single most important buying advantage in an existing business because the seller retains a vested interest in your success.