Why Buy an Established Business vs. Starting a Business from Scratch?

starting a business or purchasing an existing business

Why Buy an Established Business vs. Starting a Business from Scratch?

Have you always dreamt of being your own boss? You control the direction of the company, make the key decisions, hire the right people……Sounds wonderful, right?

Starting a new business does not come without significant startup challenges: gaining brand recognition in the marketplace, acquiring new customers, no immediate cash flow, training new employees, calculating demand for products. Most startups take three to four years to become profitable. Statistics also show that 9 out of 10 start-ups fail.

Still think that starting your own business sounds great?

There is an easier path to business ownership. Purchasing an existing business with a proven track record will set you up for business ownership success.

 

Why Buy an Established Business?

Here are six convincing reasons why purchasing an established business is more beneficial than a startup.

  • Existing customer base

An established business already has a solid customer base with an existing revenue stream.

  • Established brand/name recognition

It takes time for a business to build a reputation and credibility. When buying an established business, you have instant name recognition.

  • Easier to get financing

An existing business will have a proven track record showing the company’s financial history, balance sheets, business tax returns, profit margin, etc.  Lenders will more likely approve financing based on these proven numbers.

  • Immediate cash flow

Statistics show that cash flow (mis)management has caused 82% of start-ups to fail. It is difficult to ignore the importance of existing revenue and the security it provides. While starting a business from scratch may take years to become profitable, an established business can give you the immediate cash flow you may need.

  • Trained employees

Hiring and training new employees can take a significant amount of time and money. Not to mention how hard it is to hire good employees in the current state of the economy.

  • Owner willing to stay on

The advantage of the existing owner willing to stay on and teach you the ins and outs of the business is invaluable.

 

Overall

Buying an established business is a smarter, easier and less risk adverse way to becoming an entrepreneur or to expand your business. An experienced M&A team can help connect you with the business of your dreams.

If you are a current business owner looking to expand, acquiring an additional business is a smarter choice than trying to add additional products or services internally.

 

Contact Minneapolis Business Brokers Transitions In Business

If you’re considering buying or selling a business in the Minneapolis/St. Paul metro area, contact Transitions In Business in Edina, MN. Our experienced team can help with your mergers and acquisitions needs. Call us today at 952-405-8470.