There are many advantages to buying an existing business.
Already Established Customer Base
When you buy a business, you also buy that business’ customers. The more customers, the more that you will pay for the business. However, these existing customers will give your business an immediate cash flow and opportunity to improve on existing business relationships.
You will usually receive whatever inventory is currently on the shelves or in the warehouse when you buy a business. This will give you an idea of what sells and what doesn’t. It also allows you to spend your capital on other necessary items such as advertising or payroll.
Existing Staff in Place
Once you buy the business, you can keep any or all of the business’ employees. Seasoned, knowledgeable employees can help you overcome the early jitters and share them with you any quirks or insider information that’s vital to your business or industry. They can shorten the learning curve substantially; however, with new ownership comes apprehension by current employees so this is as much an area of concern as well as opportunity.
Regardless if the existing business that you buy is good or bad, the business already has an identity and image. You may have the opportunity to improve on an already bright image or you may need to repair and improve a tarnished one. Intangible assets such as a brand are often one of the most valuable and overlooked attributes. It’s important to financing and when assessing the assets of a business.