Choosing a Business
Finding profitable businesses for sale at reasonable prices can be difficult, as business owners often have an inflated idea of the market value of their business. There are, however, many resources for finding profitable businesses for sale.
Among the many favorable aspects to buying an existing business is the drastic reduction in startup costs. In addition, cash flow may be immediate because of existing inventory and receivables. Other advantages include existing goodwill and easier financing opportunities, assuming the business has a good reputation.
Among the biggest downsides to buying a small business is the initial purchasing cost. As developing the business concept, customer base, brands, and other fundamental work has already been done, the costs of acquiring an existing business may be greater then starting a new business. Other possible disadvantages include hidden problems associated with the business and receivables that are valued at the time of purchase, but later turn out to be noncollectable.