Buying an existing business makes sense on many different levels. Sometimes, people who have never thought of owning a small business will see one for sale and immediately wonder if they would be a good fit for it. Anyone who is considering owning a small business should put some thought into buying one that already exists. Anyone on the fence shouldn’t be because buying an operational business is a great idea, and there are key reasons for that.
The business model has proven to work
Okay, so this is a big thing, which, at first glance, might not seem as important as it really is. If you start a business from scratch, you have no idea if that business will be profitable. Even if you start a business that is extremely profitable down the line, it will take some time before that happens. If you buy a small business that already exists, you know if it’s profitable.
By buying a small business that has been put through the wringer, you know that you’re getting something that will turn a profit. All of the kinks have been worked out, and you have to maintain the current business flow. You’re buying a well-oiled machine that operates the way it should, and that means fewer headaches for you.
Some of you may be interested in buying a franchise, and even those small businesses are still better to buy once they’ve been off the ground for a while. Just because you’re buying a franchise doesn’t mean the business won’t have growing pains. It only means you’re buying a name and a well-known product; there’s still plenty of ironing out that you have to do to ensure the business runs smoothly.
You’ll have an established customer base
Getting customers to any business is super hard. This is especially true if you’re a new business that no one has ever heard of before. You don’t have to worry about building up a customer base when you buy an existing small business. The customer base has already been built for you.
All of the blood, sweat, and tears required to get customers has already been done for you. None of this is saying that you’ll never have to go out and get more customers. As you probably already know, it’s vital that you continue to expand your customer base so your business thrives. But, since you already have a lot of customers, it’s going to be much easier; plus, you can use the methods the previous owner used that were successful in driving customers to their business.
Scaling your business is much easier
Scaling becomes much easier when you have a solid foundation from which to work. You already have a pool of workers that you can promote to managerial positions in your company if you want to expand. You also have a rock-solid method of getting customers, and you’ve also got the process down pat on how to make them happy.
Many of you reading this don’t want to settle for just one business; you want to grow. Maybe you want to turn it into a massive business that you can pass down to your children once they’re old enough to take over. You know that’s not going to happen if all you have is a mom-and-pop shop.
It’s a bad idea to go into the business with the idea that you’re going to scale it up right away. You need to get yourself familiar with the entire process of what your business can do. If you scale a business that you don’t understand, you’ll be held hostage by workers who are indispensable because they know the business better than you do.
You’ll have access to a world of financing
We’re only going to touch on this a little bit because it’s fairly self-explanatory. You’ll be able to use your existing business as collateral when seeking loans. That means if you do want to scale down the road, you’ll have access to the capital required to do so. You won’t have to jump through hoops to get financing, and that will ease your burden quite a bit. Even if you don’t want to scale up your business, access to credit is important so you can improve your current business and make it more profitable.
A few last thoughts
Buying a business that has been tried and tested makes sense on many different levels. It gives you a head start without all the headaches of trying to create something from scratch. It also enables you to expand if the desire ever arises and you’re ready to grow.