The Benefits of Purchasing an Existing Business

By on January 20, 2018

There are advantages to purchasing an existing business as opposed to starting a business from scratch. Some of the benefits are:

1. You can get an existing business at a bargain price when the owners of the existing business are getting ready to retire and don’t have any family members to take over their business. If it’s not retirement they are looking for then they are probably looking to relocate to a different part of the country and don’t want to move their store with them.

2. When you buy an existing business it allows you to bypass all the problems of having a start-up business. For instance, you already have an idea of the income made on a daily, monthly, and yearly basis; instead of having to make projections based on what other similar stores have done previously. Then when you plan your advertising, you already know who your target market is.

3. The guesswork is minimized because the previous owners can tell you what type of advertising they have done previously– what has worked and what hasn’t worked. This cuts the learning curve in half on building a business for the future. It is easier to have an existing business then to build a business from scratch and learn from trial and error, what works and doesn’t work.

4. The owner can give you valuable information on your customer base, for instance: what they like and don’t like, what the neighborhood is like, who has children or grandchildren and their ages, what style of clothing they prefer if its a clothing store, what are their preferences in food if its a restaurant, etc.

5. The current owner who is selling the store to you can also give you a list of the suppliers they used to purchase the products they sell, the amount of time it takes to receive your order from each supplier, when is the best time to purchase from them, that is, when they have a large inventory and when they are low in inventory.

6. You inherit trained employees which also helps lower your start-up costs since you don’t have to worry about advertising to find new employees and then the expense of training them. The only thing you have to worry about would be making sure that they understand the importance of customer service and your expectations of them to provide good customer service techniques.

When thinking about starting up a new business or purchasing an existing business, make sure you do your due diligence and research first. This way you have an advantage when talking to a business owner who is selling an existing business. For instance, this advantage gives you a knowledge of the value of the business to begin with, therefore, you will not be purchasing a failing business at an inflated price.

By purchasing an existing business when you go to the bank for financing you can have a worksheet showing financial statement based on past sales and projected increase. Such as, expected inncome for future sales based on a 10% growth in sales.

An existing business gives you an immediate cash flow. That way you don’t have to wait until you purchase inventory and open your doors to customers. in today’s marketplace, having a brick and mortar store is not enough. Every small business and   franchise  also has a website and and incorporates e-commerce to sell their products. During the holiday season such as Christmas, it is no longer just Black Friday, but also cyber Monday. More and more people are purchasing products over the Internet, so these items can be delivered directly to their home, rather than carrying packages to the car, since crime has increased, especially during a down economy.

Source by Davida Shensky

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