Be Your Own Boss: Buy A Business
There are many reasons why a newcomer to the world of business may consider buying an existing company rather than building up a new brand from nothing, but there are reasons too which can be attractive to the most seasoned of entrepreneurs. But what are the benefits of buying into an existing business, and how viable an option is it?
Certainly, there are many times when buying into a business may not be the ideal solution, but for an entrepreneur who is happy to work within the guidelines of an existing organisation – whilst still retaining the freedom of being one’s own boss – there are some clear advantages. Of these, the strength of branding is perhaps the most important.
Product identity and brand loyalty are two of the foremost considerations of any business leader who is considering a business for acquisition. The strength of the brand is the primary influence not only on the way your product line and inventory is perceived by customers, but also dictates your short term profitability and growth. A brand which is known for excellent service, great design, or high quality manufacture will provide the strongest foundation on which a new leader can build his or her business strategy.
On the other side of the same coin, there is the failing brand: that which is notorious for poor performance or unsatisfactory services. Whilst this type of enterprise will be a less attractive proposition for a new owner, it can also provide an excellent opportunity for an ambitious and confident business leader to demonstrate his or her business acumen by reversing a downward trend and bringing better fortunes to the brand with a sound business plan. A brand which is struggling in its market will also present a more attractive purchase price to interested parties than a strong or dominant name.
The second most attractive attribute of buying into an existing business is the potential to discover substantial cost savings on infrastructure and facilities. An established business is already operational at the time of purchase, complete with premises, staff, logistics, processes, and ongoing business agreements and contracts with customers and suppliers.
The benefits of buying all of these assets as one should not be overlooked. Although the initial purchase may require a larger amount of start-up capital for the purchase, the certainty which is offered by having guaranteed arrangements in place will make it an easier task to obtain funding for the buy-out through commercial lenders, and will mean you can begin earning from day one.
This is why it is so crucial to perform due diligence checks on any company you may decide to target for purchase. By examining the existing contracts you can obtain a greater understanding of the true profitability of the enterprise. At the same time, any period of transition into new ownership can prove to be the perfect time to renegotiate exiting contracts with more favourable terms.
A smart investor will understand the advantages of buying an existing enterprise. It need not be a restrictive or confining alternative to starting an entirely new business from the ground up if you approach the task ahead with imagination and ambition. But nor should it be presumed that this is an option which commands risk-free profits and success. Steering any business through a period of transition and new ownership requires a clear direction and strong leadership skills. But with a sensible approach, an entrepreneurial spirit, and a robust strategy, acquiring an existing business may be the perfect new beginning for any business leader.
This article was contributed by BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis, the online media group also behind FranchiseSales.com and PropertySales.com