Buying a Business
Pros and Cons of Buying a Business
We discuss the advantages of buying a business. It's a great way to get started as an entrepreneur, but it's not for everyone. So, we also discuss the disadvantages of buying a busines. Ultimately, it's up to you as to whether you decide to buy a business or start a company from scratch.
Interested in buying a business? Want to know how to buy a business? First, consider if it's right for you.
Many find the idea of running a small business appealing, but lose their motivation after dealing with business plans, investors, and legal issues associated with new start-ups.
For those disheartened by such risky undertakings, buying an existing business is often a simpler and safer alternative.
Advantages of Buying a Business
The main reason to buy an existing business is the drastic reduction in start-up costs of time, money, and energy. In addition, cash flow may start immediately thanks to existing inventory and receivables. Other benefits include pre-existing customer goodwill and easier financing opportunities, if the business has a positive track record.
Disadvantages of Buying a Business
The biggest block to buying a small business outright is the initial purchasing cost. Because the business concept, customer base, brands, and other fundamental work has already been done, the financial costs of acquiring an existing business is usually greater then starting one from nothing. Other possible disadvantages include hidden problems associated with the business and receivables that are valued at the time of purchase, but later turn out to be non-collectable. Good research is the key to avoiding these problems.
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