Should You Buy or
Start a Business?
When you consider venturing on your own
you can either buy an existing or or start a business from
scratch. Here is a list of the advantages and disadvantages
of buying an existing concern:
Advantages of Buying
Existing client base:
if the business has a list of regular clients or contracts.
Good name at suppliers: if the current owner has
a good name at his suppliers he can introduce you to them
and help negotiate favorable terms.
Suppliers list: this is valuable since the current
owner already did the research on the best suppliers.
Image: you can build on the established image.
Structure: if there is already a structure for accounting,
management, production line, policies, pricing, contracts
and more that you can use.
Immediate cash flow: because of existing inventories
Advertising cost lower: if the current owner did
Financing: is easier if the business has a good record.
Startup costs reduced: logo design, website, letterheads
and brochures, fittings and equipment already in place.
Staff: trained and loyal staff.
Hidden problems: debt, bad credit name, internal
staff problems, product value is less than stated, returns
that can not be refunded by suppliers.
Name of owner: played a major role with clients and
suppliers, especially when it is a one-man cocern.
Cost of purchase: it is more expensive to purchase
a business than start a new one.