People choose to buy a business rather than start one from scratch for different reasons. The primary reason is that it gives them a head start on ownership. Buying an already established business decreases the amount of time it takes to become an entrepreneur and the risks involved.
It is widely known that half of all new businesses fail within their first four years of operation. The #1 cause of business failures includes lack of sufficient capital. For people who would like to start their own company with a greater chance of survival, acquisition seems to be the best option to go with.
Black Enterprise: Guide to Starting Your Own Business by Wendy Beech has outlined a few advantages of buying a business. They include:
Immediate cash flow – As the purchaser of a reputable company, you have existing inventory and accounts receivable. They can generate cash flow from the very first day you take over the business.
Existing reputation – When buying a business, you are automatically associated with an established and reputable name. Customers, vendors, and business colleagues already know you and aren’t hesitant to do business with you.
Ready Made-Staff – The employees normally know the business inside-out, so you will save the considerable money and time you would typically spend training new recruits.
Recognized market positioning – A marketing communications campaign (i.e. advertising, promotions, and public relations) has already been established. Therefore, you are aware of how to position your products and services. Prices have been set and you know exactly who your target market consist of.
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