10 Reasons For Buying a Business Rather Than Starting One

10 Reasons For Buying a Business Rather Than Starting a New One

October 21, 2020

Do you dream of starting your own business? It’s easier said than done. You might have seen studies that show that between 60 and 90 percent of startup businesses fail within 5 years, and most startups fail within the first two years.

Have you considered buying an existing business? Here are 10 reasons why you have a better chance of success buying a business than starting your own from scratch:

1. Clear Financial Picture

With an existing business you are more able to develop an accurate financial picture and gauge future earnings, whereas startups rely upon pro forma budgets.

2.  Cash Flow

By starting your own business you could be waiting months, possibly years, before there is enough cash flow to cover the costs of operations, payroll, and debt service. This is not a concern for the new owner of an existing business, who can immediately rely on projected revenue.

3. Trained and Skilled Workforce  

Where would your business be without a skilled team? Startups can take months to recruit a team of skilled employees and then you must consider additional time necessary to train them before being fully productive.

4.  Established Suppliers and Credit Lines

Another thing that takes time and effort for a startup is establishing relationships with suppliers and being approved for lines of credit - not something you’d have to worry about if you bought an existing business.

5.  Established Customer Base  

It takes time to make a name for yourself as a startup. By buying a businesses you won’t have to spend valuable time and effort finding customers and convincing them to do businesses with you, and you'll have existing happy customers who are spreading the word and bringing in referral business.

6.  Licenses and Permits

Existing businesses already have many of the necessary licenses and permits that are essential for operations. By starting from scratch you need to be aware that obtaining new ones can take weeks or even months.

7.  Growth Strategies

By completely skipping over the startup phase and purchasing an established business, the existing team may be able to provide the you with a documented growth strategy.

8.  Easier to Finance

A startup doesn’t have a history and a proven track record to its name.  This means that banks will be less inclined to approve loans because they can base their lending decisions on actual existing results. This is not an issue with an established business, and that’s important because in many instances, entrepreneurs rely upon seller financing in order to close the deal.

9.  Better Work-Life Balance

Creating a new business can be all-consuming. If you enjoy your leisure time and flexibility, buying a business might be a better option for you.

10.  There are Successful Businesses Ready for You to Buy Now!

There are several well-established methods for identifying a suitable business available for acquisition, and Calkins Law Firm is happy to help!

Steady Advice from Trusted Experts

During times of transition, you need to know that the advice you’re receiving is sound. This is especially true of your legal counsel, and it’s what you can expect from Calkins Law Firm. You can rest assured that we will always employ our well-honed skills on your behalf and offer honest dialogue about the best path forward. Are you looking for representation but haven’t yet found a business law attorney you can work with? Reach out today to learn how our team can help.

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