Why should you buy a business vs. starting your own?
For the unemployed, those worried about job security or those ready for a complete career change, buying a business in AZ is just as feasible an option as a traditional job search or starting a business from scratch. One of the most serious career choices you can make is whether you will be on the clock for someone else or work for yourself.
There are certainly pros and cons to both buying and starting a business. If you do a careful examination, you’ll learn what many experienced entrepreneurs have discovered…the risk-to-reward ratio is tipped in your favor when you purchase an existing business.
Here are six reasons why buying an existing business may be better than starting one:
1. Easier to secure financing.
Most existing businesses have actual financials. Compared with startups, which rely upon pro forma budgets (budgets that forecast revenues and expenses in advance for a particular project), existing businesses are more able to gauge future earnings and develop an accurate financial picture. The bank can see historical performance and not just rely on those financials or projections. They are more inclined to lend you money for the purchase of an established business. From their point of view, there is less risk involved in financing a business that has already proven it is able to generate an income.
2. Immediate and predictable cash flow.
Phoenix start-ups go through an initial phase when they do not generate an income – for some, this can be three years or more. With a properly structured acquisition, the business revenue should enable you to cover the cost of any bank loan, take a reasonable salary and have some left over to take the business to the next level.
3. Brand recognition.
There is a significant advantage when you acquire a business with existing marketing, advertising, client contracts, trained employees and third-party relationships. It comes complete with all the trademarks, copyright and websites associated with it. The on-going benefits of any marketing or networking the prior owner has done will transfer to you.
4. Trained employees in place.
Existing businesses near Tempe come with a trained and skilled workforce. It takes time to build up and train a team of employees. With the right team already in place, you can focus on growing the customer base and developing new business. It also means there is a trained team that can keep things running if you want to take time off.
5. Instant customer access.
An existing business has an established base of customers and referrals. You can use various strategies and marketing to build on that customer base, but you don’t have the task of building it from scratch. Startup businesses have to spend time and effort introducing themselves to customers and convincing them to do businesses with them. It’s very common for the seller to stay on and transition with the business for a short time to transfer those relationships to the buyer.
6. Focus on growing the business.
Existing businesses have growth strategies. With a start-up, you can channel all your energy into getting the business off the ground and this can be time-consuming and exhausting. With an established business you can start working immediately and focus on improving and growing the business. The seller has already laid the foundation and taken care of the time-consuming, tedious start-up work.
Becoming your own boss always involves a risk. When you buy a business, you take a calculated risk that eliminates a lot of the drawbacks and potential for failure that come with a start-up. Taking over an established business means that business practices have been streamlined and with existing employees who know the ropes, it won’t be necessary to work around the clock.
If you are interested in buying successful business, call Arizona Business broker Phil Reese. He has many businesses for sale right now, including retail, business services, franchises and manufacturing.
Written By: Phil Reese
Phil Reese – Arizona Business Broker
7077 E. Marilyn Road, Bldg. 4 Suite 130
Scottsdale, AZ 85254