What was the last thing you built from scratch? There are a lot of advantages to buying something preowned. This applies to businesses as well as cars and homes. Setting up a brand new business is hard.
You will make costly mistakes along the way. You need to train up employees. You need to let people know you are there. It can take time to bring in clients. During that time, you will need the funds to support yourself and pay any employees. There are a lot of advantages over starting from the ground up:
- You get an idea of the market that exists.
- People already know the business is there.
- You have employees with experience.
By buying an ongoing concern, you can hit the ground running. Hopefully, the previous owner will have ironed out many of the issues.
Why do people sell businesses?
Not all businesses that are up for sale have anything wrong with them. Think about a preowned car. Sometimes the owner is selling because they fancy a change. Maybe the car runs great, but the owner has health issues and can no longer drive it. Or the car has problems they do not have the skills to fix, but you do.
Second-hand businesses could have nasty hidden surprises
Seek legal advice to ensure all the business paperwork is in order, and there are no outstanding lawsuits. Have your accountants check the tax payments are up to date, and the figures are what the owner says. Much like cars, you need to take extreme caution when buying a preowned business. Yet, if you know what you are looking for, there are some great deals to be had.