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Don't Start a Business, Buy One!

Written by: Tom Parsley

Article Overview: Do you want to own a business? Here are ten solid reasons why you should strongly consider buying an existing business versus starting one from scratch.

Don't Start a Business, Buy One!

Why should you buy a business versus starting your own? Here are ten solid reasons:

1) The success rate for businesses purchased is much higher than the success rate for a new business startup.
2) An established customer base means immediate cash flow!
3) It is much easier to find capital to buy an existing business than to start a new one.
4) Many sellers are willing to carry-back financing at very reasonable terms.
5) Projections for a startup are nothing more than an educated guess. Projections for existing businesses for sale are based on historical results.
6) Startups always, I repeat, ALWAYS cost more to start than expected. For the money you will end up spending to start that new business (which may or not succeed) you could have probably purchased an existing business with immediate cash flow.
7) You may actually need to come up with less cash for your down payment plus working capital when you buy an existing business than you would need if you started your own business. Why? With owner carry financing and a performing track record, your existing business purchase is very bankable.
8) An established web site presence. Although each business will vary, most businesses rely to some extent on a business web site. The longer a web site has been established, and the more traffic that web site receives, the more value search engines place on that site.
9) Many businesses listed for sale are actually very fairly priced. One can often find a business for sale that will sell for three to four times cash flow. Think about it. Four times cash flow equates to a 25% annual cash return on investment. 25% will usually cover all debt service and still leave a decent return for the investor.
10) Less brain damage. Just ask anyone who has been “wrung through the wringer” by starting their own business.

When you think about it, it really is a pretty easy decision.

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