6 Reasons people buy an Ongoing Business instead of Starting from Scratch
Starting a business and building it from scratch could be a bit burdensome for some persons. Meanwhile, there are many ways of starting or owning a business. One of the ways to owning a business is to buy an ongoing business enterprise and together, we will see why many persons opt for this option.
Below are some of the advantages and reasons people choose to buy an ongoing business:
Easy access to a profitable network of relationships: Much as the new owner will have to work out his strategies for attracting new customers, existing loyal customers form the springboard for subsequent action. Equally, a good relationship with suppliers augurs well for any business concern and is the basis for being given trade credits. In the same vein, a good credit rating of the business by bankers is certainly an advantage. So, acquiring an existing business give the new owner easy access to existing relationships, especially relationship with customers, suppliers, and bankers.
Availability of a Tested Market: Here is the second reason. Instead of relying entirely on market survey, an on-going business mirrors the prevailing market position of the affected business with a minimum amount of error. The current volume of sales and the profitablity the existing marketing strategies are also readily available for evaluation. Hence, the new owner doesn't have the task of carrying out a new market survey rather he enjoys what the previous owner did.
Another advantage is that the new owner will have an already tested business location. Finding the right location could be tasking a times and the success of a business at a particular location, especially for location-sensitive enterprises, suggests that the choice location is th business is appropriate. The buyer is spared the tedium and risk associated with choosing a location for a new business.
More so, the buyer will tended to have experienced workers/ employees. Having relevant experience in a particular line of business could hold the key to business success. Finding and recruiting such caliber of staff is not always easy. Those with the requisite experience might not be available as at when needed. But with an on-going business, the buyer is not handicapped in that regard.
Business entry by buying an existing one has the advantage of being inexpensive. Now, depending on the circumstances surrounding the sale and the bargaining skills of the buyer, buying over a business could be a relatively inexpensive way of owning a business.
Lastly, technology acquisition is an added advantage. In some cases, the main reason for buying rather than forming a business a business enterprise is to facilitate the acquisition of a specific technology. This is more often the case where an existing business is expanding or diversifying its process. But even for a new entrant, ownership by acquiring a business with th necessary know-how is an attractive option.
In spite of the above mentioned advantages, it is necessary to exercise maximum caution when negotiating a business purchase. The burden is on the buyer to gather as much information as possible about the business that he intends to buy.
