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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 sufficient advertising.
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.

Disadvantages of Buying

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.

 

Author: Isebell Gauche

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