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Reasons for Purchasing an Existing Business

October 17, 2018

Purchasing a business presents fewer risks as compared to starting one from scratch. Its owners have already established a good connection with its employees, customers and suppliers.

If you do your diligence well, purchasing an existing business will have tons of benefits. They include the following.

  1. Ability to Secure Financing

As a startup, most lenders are unwilling to offer credit financing. The ones that would want to advance your credit will do so at a higher rate. The main reason for this is the higher risks your business faces.

Before advancing credit, the lenders will want to know whether your firm is productive now and, in the days to come. With the established business, this can be done simply by analyzing the financial records.

An existing business has shown its ability to generate revenue. As such, the lenders will be certain that the business will make the repayments on time.

2. Continuous Flow of Income

Among the major reasons to start, own and run a business is to generate income and maximize on your wealth. Starting a business from scratch will take years to break even before you can enjoy any returns.

If you don’t want to go through this stage of negative cash flow, purchase an existing firm to starting your own. The returns you get will more than make up your initial investment.

3. A Known Brand

When you purchase a business, you’re purchasing more than the immovable assets. You’re buying its brand. Clients will always separate your business from that of your competitors through your brand name. It may take years to create this brand.

Having an established brand gives your lenders, suppliers, buyers and other contractor’s confidence in your business. A business startup may take up to years to create this brand. This is especially true if you are looking to buy a business for sale in a local area. For example, if you are looking at businesses for sale in Miami, the branding of the business will already be known to consumers in the area, so you won’t have to establish yourself against the competition.

4. Established Customer Base

An existing company will have an existing customer base. You’ll be purchasing the business together with its loyal clientele.

After the purchase, you’ll only need to employ strategies that help grow your customer base. In this, you won’t have to start from zero customers and expand outwards.

5. An existing Network

Most business owners who start a business from scratch spend a lot of time establishing networks.

Good marketing and supplier contracts are an invaluable asset to any company. Buying a firm with an established network allows you to hit the ground running.

Furthermore, suppliers, marketers and lenders will offer better trade deals to companies that have been in existence for years.

6. You Focus on Business Growth

All startup business owners focus their time, resources and energy to get their business off the ground. This can be very exhausting and time-consuming.

However, by buying an established firm, all your focus will be on how to grow your business. It gives you the liberty to focus on individual segments of the business that needs attention. It also gives you the freedom to choose how you invest the proceeds you get as revenue.

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I’m Tim from The Tech Block. Tim Techy! haha. I’m all about gadgets, gaming and technology. I don’t just sit in my house all day playing around on gadgets, but they are very integrated into my everyday lifestyle. When I work out I use technology to track it, when I turn the heat on in my home, I use my computer to do it and when I travel, I take my fun techie stuff with me!

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I’m Tim from The Tech Block. Tim Techy! haha. I’m all about gadgets, gaming and technology. I don’t just sit in my house all day playing around on gadgets, but they are very integrated into my everyday lifestyle. When I work out I use technology to track it, when I turn the heat on in my home, I use my computer to do it and when I travel, I take my fun techie stuff with me! Read More…

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