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
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
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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