Should You Buy an Existing Small Business?
A Home Business Article Contributed by Sarah White
Should You Buy an Existing Small Business?
When people set out to start a small business, they are often overwhelmed by the amount of planning, time and resources involved. There has to be an easier way to get out of the nine-to-five, working-for-someone-else world, doesn't there?
Buying an Existing Small Business
One way to get around the hurdles of starting your own small business from the ground up is to buy a small business that has already been in operation for some time. There are Internet sites where you can find opportunities to buy existing small businesses around the world, or you can sometimes find people advertising in the classifieds section of your local newspaper looking for someone to take over their small business.
The benefits of taking over an existing small business include not having to deal with all the ground-floor problems from coming up with an idea for the business to finding a location to construction, product development, advertising and getting those crucial first customers.
An established small business can be less risky, and it can certainly take less time to start making money because you haven't sunk as much into the development of the business as you would have if you started your own small business. If the business is successful you also have instant name recognition and a product line that is known for being dependable before you even start.
All of this is very attractive and can be a big help if you are new to the business world or don't have a grand concept for your own business (or the time, money or inclination to start a business yourself).
The Trouble with an Existing Small Business
All of this sounds great, but there are potential problems to be had when buying an existing small business If the original owner is getting out of the business because the products were not successful or because he has run out of money, the business might not be a good buy. Just because you are a savvy businessman does not mean you will be able to turn a sagging business around. And if the business is already successful you will find that purchasing the business takes a lot of money up front.
It is possible that this type of business will actually turn out to cost you more up front because it is established and all the hard work has been done for you. But if it is a business you are interested in and passionate about and you really don't want to start your own small business for whatever reason, buying a business from someone else can be a good idea.
The Bottom Line on an Existing Small Business
Research is the key to knowing if you are getting your money's worth when you consider buying an existing small business. The current owner should be forthcoming about financial information, sales and the outlook for the business. If the owner is hesitant to show you records or provide you with information, you might want to consider another business. But if everything looks good and the business is a good fit for you, by all means buy an existing business and make it your own.
