I want to support an existing business by providing services in the area where they lack so that I can get a business for myself.
The answer which I will give is by my personal experience. No it is not advisable to support and existing business because there are many difficulties in starting .
Here are ten reasons why buying an existing business may be better than starting one:
1. Easier to secure finance
Most lenders are more inclined to lend money for the purchase of an established business rather than supporting an unknown start-up.
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. Income from day one
Most start-ups go through an initial phase when they do not generate an income – for some, this can be three years or more.
During this period, it may be necessary to shell out money for the premises itself, equipment and it's installation, initial stock and materials, fixtures and fittings, legal and professional fees, a license, uniforms...the list goes on.
Without finance in place or an alternative income, this stage can be tricky for new business owners and it is easy to become demotivated.
3. Established brand
With an existing business you are buying into a recognisable brand with a track record, complete with all the trademarks, copyright and websites associated with it.
This gives customers, suppliers, lenders and other contacts a confidence in your business that they may not have when interacting with an unknown start-up.
4. Instant customer access
An existing business also has customers at the ready.
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.
5. Established network of contacts
A large chunk of the time and energy involved in starting a business goes towards establishing a network of contacts.
Good supplier and marketing contacts are a valuable asset to any business and if your new enterprise has some on their books, you will hit the ground running.
In addition, like money lenders, suppliers and marketing companies are more likely to offer favourable terms to a business that has been around for a while.
6. Focus on growing the business
With a start-up, an entrepreneur has to channel all their energy into getting the business off the ground and this can be time-consuming and exhausting.
In contrast, taking over an established business means you are free to focus on the particular parts of the business that most need attention, aiding the growth of the enterprise as a whole.
7. Income to put back into the business
With a start-up, lack of finance to do what you really want with the business can be frustrating. Cash is eaten up in buying the resources needed to get things up and running, and dreams are left by the wayside.
With a steady income from an established business, you have more freedom in how you choose to re-invest this money.
8. Trained employees in place
Just as it takes time to build up a network of suppliers and other contacts, it also takes time to build up and train a team of employees. These people are already in place in an existing business.
This can make it easier to implement strategies for growth and development. It also means there is a trained team that can keep things running if you want to take time off.
9. Less risk
There is obviously less financial risk for lenders involved in buying a new business and it is also a safer option for the potential business owner.
Providing the business is doing reasonably well, it should continue to do so. In contrast, starting a new business is a jump into the unknown as far as financial security is concerned.
10. Less work
Starting up a new business can often become all-consuming. With so much to do, it is easy to allow the business to completely take over your life.
Those who don’t have huge amounts of passion and energy for the business can find that they begin to resent this.
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.
Further queries you can consult me
You can start from scratch if you want to but starting from scratch presents some distinct disadvantages, including the difficulty of building a customer base, marketing the new business, hiring employees and establishing cash flow all without a track record or reputation to go on. When you buy a business, you take over an operation that is already generating cash flow and profits. You have an established customer base and reputation as well as employees who are familiar with all aspects of the business. On the downside, buying a business is often more costly than starting from scratch. However, it is often easier to get financing to buy an existing business than to start a new one. Bankers and investors generally feel more comfortable dealing with a business that already has a proven track record.
If you are not careful, you could get stuck with obsolete inventory, uncooperative employees, or outdated distribution methods. Buying the perfect business starts with choosing the right type of business for you. Think long and hard about the types of businesses you are interested in and which are the best matches with your skills and experience. Next, pinpoint the geographical area where you want to own a business.
Assess the labour pool and costs of doing business in that area, including wages and taxes, to make sure they are acceptable to you. Once you have chosen a region and an industry to focus on, investigate every business in the area that meets your requirements. Start by looking in the local newspaper’s classified ad section under "Business Opportunities” or "Businesses for Sale. And just because a business is not listed does not mean it is not for sale.
Put your networking abilities and business contacts to use, and you are likely to hear of other businesses that might be good prospects. You also need to assess the company’s reputation and the strength of its business relationships. Talk to existing customers, suppliers, and vendors about their relationships with the business. Contact the Better Business Bureau, industry associations, and licensing and credit-reporting agencies to make sure there are no complaints against the business.
While you and your accountant review key financial ratios and performance figures, you and your attorney should investigate the business’s legal status. Legal business liabilities take many forms and may be hidden so deeply that even the seller honestly does not know they exist.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
