The (Obvious) Advantages of Buying an Established Business


* You don’t waste time scouting for a location. It’s already there.

* You know what products the business is selling or service the business is offering.

* An established customer base lets you start without pounding the pavement, looking for buyers.

* An existing cash flow means you start with a realistic expectation of some form of income.

The (Not-So-Obvious) Advantages of Buying an Established Business

* Contrary to some expectations, there may be a drastic reduction in startup costs.

* Your cash flow may go farther because of existing inventory and receivables.

* You may have more flexibility in the purchase price and more opportunities to leverage assets or borrow money to get what you want.

* Your company has an infrastructure in place, including customers, suppliers, employees, equipment and systems.  No starting at ground zero.  

Even in those cases where buying an established business will be more expensive, at least you know exactly what you are getting if you’ve investigated thoroughly. An existing business also allows you to do demographic studies on population, drive-by traffic, potential customer base and a whole series of studies that will indicate that “theoretically” your new business will do well. Your demographic studies may even give you clues to things you can do to make it better than the previous owner.  The only thing you’re not guaranteed is success, which depends primarily on you.