If you've decided to buy an existing business, you'll want to be sure you're making the right choice in your new venture. Only you can determine the right business for your needs; however, the following topics can help guide you to the most appropriate decision.
The Steps to Starting
There are many different choices of businesses to buy. Take these steps to narrow down the list of potential businesses you may want to buy.
1. Identify Your Interests
If you have absolutely no idea what business you want to invest in, first eliminate businesses that are of no interest to you.
2. Consider Your Talents
Being honest about your skills and experience can help you eliminate unrealistic business ventures. You need to be the driving force behind your business, and the expert when it comes to what your business is offering.
3. List Conditions for Your Business
Do you plan to be available seven days a week? Do you want to be in a certain location? If a business has a condition that is unfavorable to you, can it be changed?
4. Quantify Your Investment
How much can you invest in this business? How much can you afford to buy this business? Finding profitable businesses for sale at reasonable prices can be difficult, as business owners often have an inflated idea of the market value of their business. There are, however, many resources for finding profitable businesses for sale.
Advantages to Choosing an Existing Business
There are many favorable aspects to buying an existing business:
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Drastic reduction in startup costs
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Cash flow may be immediate because of existing inventory and receivables
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Existing goodwill and easier financing opportunities, assuming the business has a good reputation
Disadvantages to Choosing an Existing Business
The following are some downsides to buying an existing small business:
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Purchasing cost may be much higher than the cost of starting a new business because the initial business concept, customer base, brand and other fundamental work has already been done
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Hidden problems associated with the business and receivables that are valued at the time of purchase, but later turn out to be non-collectible
