Buying An Existing Small Business

Rather than starting a new business you might consider buying an existing business. There are a number of advantages and disadvantages with this.

The advantages of buying an existing business

The premises, assuming you take them over, will already have all the equipment, permits etc. that you need to run the business.

You will be buying an existing customer base.

The staff should already have been trained.

The suppliers of raw materials or goods will have already be in place.

The disadvantages of buying an existing business

It will cost you more since you have to pay for the goodwill.

The existing owner may be selling the business because it is in decline, a new competitor may have taken customers away from him or may be about to open a branch near him, or it could be located in the wrong area of town for that type of business.

The equipment may be old, and therefore may need to be replaced shortly. Plus if it is old it may be unreliable and more expensive to operate than new equipment would be.

The stock that the existing owner wants you to buy with the business may have been there for years and is no longer fit to be sold.

The premises may not be in the area of town, or the layout may not be exactly what you would choose if starting a new business.