Many people dream of owning their own business, but not many take it as a serious consideration that could become reality. But why should it just stay a distant dream?
If you’re considering pursuing your entrepreneurial goals, why not consider buying a successful existing business? While success isn’t guaranteed, purchasing an existing business can give you the chance to reach their professional and personal goals, whatever they may be. Here are seven reasons why you should consider this pathway.
Now is a great time to pursue entrepreneurial dreams
The effects of the pandemic have meant that millions of people have been made redundant or were placed on furlough, giving them time to consider alternative career paths or even turning existing hobbies into a side hustle.
There has certainly been a rise of becoming your own boss and pursuing goals that have been on the back burner for years because there just wasn’t enough time! If there was ever a time to own a business, now is it – there are plenty of others just like you who you can network with and lean on for both business and emotional support.
Easier to secure finance
From a trust perspective, many lenders feel more comfortable lending money for you to buy a business rather than supporting a startup that may not even get off the ground, meaning they lose out.
There is less risk involved from their perspective as the existing business already has an established premise, existing client base, trained staff, etc.
You may also be able to ask the seller to finance either a part of all of your purchases. Seller financing means it could potentially take less capital to buy a business than a startup, which is one of the biggest benefits of buying an existing business. Some sellers are feeling trapped and even desperate to get out of the business, so they may be willing to assist you.
It’s a fantastic time for B2C businesses in particular
Now that restrictions have been fully lifted in the UK, many people are taking full advantage of going out to restaurants, cafes and nightclubs, meeting up with loved ones they may not have seen for a long time.
This means there are lots of people out there looking for places to eat, drink, and dance – including your potential new business.
There is still a huge push to support local businesses
Again, the pandemic has created a push towards still supporting small local businesses that were less safe during lockdowns than bigger conglomerates. Pre-COVID, it seemed like those bigger businesses who allowed for online purchases were going to cause the death of the high street or local pubs. Quite the opposite has happened, with small businesses becoming the lifeline for local communities.
4. There is an income stream from day one
When you start a business from the ground up, you may not have any income at all for three years or even more. This is due to overheads such as renting a workspace, buying equipment, organizing insurance, staff wages, etc. before there are enough clients/customers to make a profit.
It’s very easy for business owners to become demotivated during this process if they do not have an alternative source of income. This can be avoided simply by acquiring an established business – you’ll have an income stream as soon as you sign the purchase contract.
With an existing business, you know what you are set up for. Startups are constantly faced with surprises, ranging from competitor curveballs, finding suppliers, creating an expensive marketing strategy and financial/funding issues. With an existing business, you can avoid the groundwork, uncertainty, and costs associated with this initial period.
If you are buying a limited company you can leverage the business’s collateral, e.g. equipment or physical assets, to obtain the financing required to purchase the business. This is an attractive option for many prospective business owners.
5. Employees are already trained and knowledgeable
Rather than spending a lot of your precious time posting job roles, interviewing candidates then training them up, these people are already in place in an existing business. They know how day-to-day operations work so that you don’t have to constantly be involved in the business. Start-ups often underestimate the cost and time that recruiting the right people takes.
It also means that when it comes to growth and development strategies, they are much easier to implement. An experienced workforce that understands how the business functions from top to bottom are invaluable.
Because of this, systems and processes are already in place. Many business owners struggle to figure out how to do everything early on, from what products are best sellers to making sure profits are made. Even if the team isn’t doing them the best way possible, they are doing them – this will make it easier to figure out how to improve them. Your fresh perspective can really help.
Also, existing employees in the business you’re buying may already have their own ideas on how to make things better than the current owners were hesitant to implement – listen and consider using them.
6. There is a financial history
Existing businesses will already have a financial history so that you can accurately predict year-on-year profits as well as budget for the next financial year. You will have a much better idea of revenue and costs compared to a startup, where you may not know where your next client is coming from.
You’ll also be able to see which services/products are your most popular so that you know which areas to push further with marketing. This brings us on to…
7. Marketing is likely already in place
If you are buying an established business, it likely already has a website, social media presence, and a Google My Business profile already set up. This saves you both time and money as these things can be expensive to set up initially – especially if done wrong the first time around! You can continue to work on these as you develop the business further.
