Buying an old business rather than starting a new can be a good option for many potential business owners. Established businesses come with an existing customer base and are already trading. However, you may also get any problems that the business has. You need to know exactly what you’re signing up for, and be clear about your capability to run a business.
Buying a business is a complex and time-consuming process. You will need to investigate in detail the business you plan to buy, making sure it is feasible and has a well-developed market for its products or services.
You will have to check business records, plans and operations, and familiarise yourself with your competitors and the industry. You will also need to check that the business has the appropriate licenses, permits and registrations and find out which ones can be transferred to you.
Buying a business is a serious investment. You should always seek professional legal and financial advice before signing any documents. This guide provides an overview of buying a business.
Advantages of buying a business
Buying a business is generally considered less risky than starting your own business, especially if you can buy a well-managed, profitable business for the right price. Consider these advantages:
- The difficult start-up work has already been done. The business should have plans and procedures in place.
- Buying an established business means immediate cash flow.
- The business will have a financial history, which gives you an idea of what to expect and can make it easier to secure loans and attract investors.
- You will acquire existing customers, contacts, goodwill, suppliers, staff, plant, equipment and stock.
- A market for your product or service is already established.
- Existing employees and managers will have experience they can share.
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