If you want to invest in a business, you primarily have two options. You can embark on your own endeavor to launch a completely new company, or you can opt to purchase an existing online business. While there are some benefits to starting your own company or backing a successful businessman or woman in your community, there are some distinctive advantages to buying an established business. Read on to explore the eight reasons why buying an established business might beat the benefits of investing in a new company.
1. Real Results – When you’re investing in a startup or researching startup options, you’re evaluating the potential for success based on projections and market research. It’s a bit like planning your weekend by the weather report. The meteorologist uses the best information to create a forecast, but it has the potential to be wrong. Forecasts for a company’s performance can similarly be proven incorrect. When you buy an established business, you have real results to examine. You can see on paper whether or not there has historically been a demand for this product or service and have a clearer picture of just what you’re investing in.
2. Quicker Cash Flow – While you might get to frame that first dollar the day you open the doors to a startup, you likely won’t see significant, sustained cash flow until your business has been in operation for months or even years. You’ll first need to promote your business and build clientele, whereas an established business will already have customers or clients. This means you can begin bringing in cash the moment you take ownership of the company.
3. Less Unknowns – As discussed with results, when you’re involved with a startup there are so many unknowns. You don’t know if a product will be in demand. You don’t know if the right target market for the business has been identified. You can’t be sure that you have the right staff to deliver service to customers. When you’re buying a business, you have fewer unknowns with which to contend. Even if you can see that changes need to be made to ensure success, you still can develop a more accurate course of action when the business has known quantities instead of question marks.
4. Branding Has Begun – When you’re launching a new business, you’re beginning from scratch. You have to build your brand from the ground up while you try to juggle all the other aspects of running your startup. Purchase an established business and you also buy an existing brand. While it might need refining and strengthening, the name is already out there and familiar to existing customers and perhaps to a larger segment of the industry.
5. Forged Relationships with Suppliers – In many businesses, the relationship that you have with suppliers is key. You need to ensure that the suppliers are committed to helping you succeed, and it can take time to build those relationships. If you purchase an existing company, you’ll already have suppliers lined up who are familiar with working with your team. This makes it more likely that suppliers will issue credit, be willing to negotiate contracts and be generally more flexible in your dealings.
6. Employee Team – If you’re buying a business staffed by more than one person, most of those key people will likely come along with the business. This means you’ll have people to assist you who already know the ropes and are accustomed to working with your clients and your suppliers. Buying a business also greatly reduces the expense of having to recruit new employees and build a team from the start.
7. Procedures and Systems in Place – One of the biggest stumbling blocks that trip up owners of startups is creating and implementing the systems and procedures that lead to smooth operations. With an established business, these are already in place and can be adopted as-is or refined for better results. You won’t have the hassle of having to devise ways to do everything, allowing you to jump right in and begin earning.
8. More Financing Opportunity – Depending on the track record of an existing company, credit may be more readily available to you than it would be with a startup. Even if you are unable to secure a traditional bank loan for an established online business, it will likely be easier to obtain credit cards and other higher interest lending products with a business that has been open for several years.
Ultimately, the key to successfully purchasing an online business is finding the one that suits your talents and interests the best. Hiring an online business broker can help you to find the best investment.