IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog has been provided by Sarah Velasquez:
Benefits of Buying a Business and Tips for Overcoming Business-Buying Hurdles
As an entrepreneur, you’re already well-versed with the benefits of business ownership. If you’re interested in furthering your entrepreneurial prowess, but don’t want to start a new business from scratch, you can buy an existing business. Beware that investing in a business that’s already up and running is a bit different from starting one yourself.
This guide outlines the advantages of buying an existing business, highlights some of the potential hurdles you may face, and will help you decide whether or not buying an existing business is the right move for you.
Benefits of Buying an Existing Business
Buying an existing business has some distinct advantages. For one thing, you’ll already be working with an established brand, which means a loyal customer base. Their products and services will already be market-tested, saving you time on this step. If you decide to expand the business offering later, you can do your own market research using existing clientele.
An existing business will also have a solid network of vendors and suppliers you can count on, saving you the hassle of making these connections yourself. Once you take over the business, an audit of your existing contractors will make it easy to determine if these relationships are working—or if you need to find new ones.
Buying an existing business also allows you to take advantage of processes and people that are already in place. For example, you don’t have to worry about establishing operational guidelines or hiring a brand new team of people. Ideally, these components will already be there, ready for you to take over.
Potential Hurdles to Expect When Buying a Business
While buying a business that’s already up and running has its advantages, it’s not foolproof. There are hurdles to anticipate. For example, many older businesses rely on outdated technology to stay afloat. Prepare for this possibility by recognizing signs that it’s time for technology updates, like extensive lag times or slowed productivity.
Another potential downside of taking over a business that’s already been around for some time is the possibility that they have a bad reputation. Business2Community offers ideas for turning around a bad reputation, like boosting positive customer reviews and leveraging negative feedback to inform change.
Another hurdle when buying a new business is ensuring you’re paying a fair price. Businesses are notoriously difficult to valuate. Educating yourself about the valuation process and what it entails will help you do your due diligence. Usually, this involves going through a lot of financial paperwork, from profit-loss statements to cash flow statements.
Tips for Preparing to Buy a Business
Knowledge is power, especially when buying a business. To improve your odds of a successful experience, consider working with a business broker like IBA. A professional service provider can help you overcome hurdles of buying an existing business, like the difficult valuation process.
You can further prepare to conquer the challenges of buying an existing business by continuing your education. An online business degree is one way to build on the business skills you already have. You can even gain specialized knowledge in areas like leadership, management, or marketing, filling gaps in your existing knowledge.
Finally, educate yourself about some of the business start-up basics to ensure success. Points of interest include how to structure a business, where to get funding, and marketing best practices. The U.S. Small Business Administration has a handy starter guide to help get you on your feet.
Buying an existing business allows you to avoid many common startup challenges. However, this is still an entrepreneurial venture. You’ll need to invest time, money, and ambition if you want to make it work. Plus, you have to be willing to sacrifice some current certainty and security. By taking steps like those outlined above, you’ll increase your odds of success.
The preceding content was provided by Sarah Velasquez. If you have questions about the information provided, Ms. Velasquez can be reached at sarah@ourperfectabode.com
Sarah and Mark Velasquez are the creators of Our Perfect Abode. After years of renting, they recently bought their very first home. They’re currently hard at work turning that fixer upper into their perfect abode and are sharing their journey and all the tips and tricks they pick up along the way on their website: https://ourperfectabode.com/
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.