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Why
Buy an Existing Business?
By:
Richard Parker: Author of
How To Buy A Good Business At A Great
Price ©
 With
so many options available
to you, the question will become which
vein of the
business- ownership arena
shoul
you pursue? Between franchises, existing
businesses, start-ups, home- based
businesses and MLMs, it does become a
bit overwhelming. When reviewing all of
the possibilities you have to decide
what will work best for you; however,
your chances of success are clearly best
when you buy an existing business or
franchise resale for many reasons. With
any new business you have two
challenges: developing the product or
service and then seeing what, if
anything, people are willing to pay you
for it.
Regardless of a
company's past performance, an existing
business or franchise will, at the very
least, have a history from which you
will be able to make certain decisions.
Even if the company was not profitable
in the past, your strengths may lend
themselves perfectly to turning it into
a viable venture. Furthermore, you have
the ability to verify what the company
did in the past that resulted in the
current status of the operation.
Ease of
Investigation
In order to buy the right
business or franchise, you will be
required to do a thorough investigation
of its past activities, its operations,
its current status, the competition, the
industry and its future potential. You
will accumulate this information and
then you will have to determine how it
measures up with you at the helm.
Clearly, this information gathering will
be substantially more accurate and
easier to obtain when dealing with an
existing business or franchise, as you
will have the resources available from
which to get the details.
Infrastructure
You will have the benefit of
purchasing a company that has an
infrastructure, including customers,
suppliers, employees, equipment and
systems. This will allow you to focus on
building the business as opposed to a
start-up or new franchise where
everything begins at ground zero.
Purchase Price
Differences
Buying an existing business or
franchise does not mean that it will
cost you more. In fact, many times it's
less expensive than building a new
franchised location or launching a
start-up. Even in those cases where it
may require a premium, at least you know
what you are getting if you investigate
it properly. With a new franchise, a
good Master Franchiser will do
demographic studies on population,
drive-by traffic, potential customer
base and a whole series of studies that
will indicate that "theoretically" the
business should do well. However, the
only thing they cannot guarantee either
by law or in reality is whether or not
you will be successful. Also, new
locations can take a year or more to
build. You can avoid all of this when
buying a resale.
Flexibility in
Negotiating
You will have far more
flexibility when negotiating the
purchase of an existing business or
franchise versus any other options
available; it's not even close!
Everything from the purchase price to
financing is open to negotiation.
Doesn't it make more sense to put
yourself into an environment where you
have the greatest number of options
available?
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