This is always easier and safer than starting one from scratch. Statistically a large number of start-up businesses will fail, with those surviving often being sold to have their new owners make the real gains. So let the hardened entrepreneurs take the risk, develop the market, and find out what works and what doesn't.
In buying an existing business you are getting;
1. An existing customer base - these are the people or businesses that already do business with you. This means cash flow from day one.
2. Accepted products and/or services. They have already been developed and accepted into the market place.
3. Existing employees - experienced and skilled staff who understand the business and its customers, most valuable to any going concern.
4. Operating Systems - these are key in any business activity. How the business operates, what keeps the customers coming and the cash flowing? This ties everything together. It's your business formula developed by the previous owners; it may be perfect, or it could be in need of major changes.
5. History. The previous owner has operated this business and will be able to show you its financial records, its cash flow, sales and expenses. All this lessens the risk to you and your bankers, showing the companies performance and providing you with a platform on which to build.
Before starting out decide what you want, what your objectives are, and understand your strengths and weaknesses. Plan the process.
Information provided by Richard O'Brien - www.nzbizbuysell.co.nz.
Buying a Business - To learn more about this author, visit Rob Keating's Website.
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