Buy A Business - Five Reasons To Buy A Business Instead Of Starting One

You will be able thoroughly examine the financial records, tax returns and leases of an existing business.

Also, you will be able to more accurately judge the strength of the competition since the company you are considering has dealt with them on a daily basis.

The quality of the location and traffic of an existing establishment is known and proven over time - as opposed to a start-up were the quality of the location is at least somewhat unknown.

In addition, as you study a business, it's possible that you will be struck with new income generating ideas, niches that have been overlooked or weaknesses in the competition that can be easily exploited. Since you are looking at an actual business or competitor, ideas (as well as facts) can be assessed in much more realistic terms.

If you are just "thinking about" starting a business (meaning it's just a vision at this point) than everything is much more speculative and theoretical - and making the correct decisions will be much harder.

Sometimes the most valuable information you get from the owner relates to their mistakes - the things they tried that didn't work - even though they sounded like great ideas at the time. You can benefit from their experience and avoid some of their mistakes.

2.) Immediate Cash Flow - When you buy a business that is up and running it will be producing income for you immediately. When starting a business it can take 12-18 months before turning a profit. Even an educated guess as to how much cash you will need at the start to live on and run the business is still a guess.

With an existing business, your need to borrow funds for operating expenses should be less, and if you do need to borrow, the guesswork is eliminated because you know how much cash the business is generating.

3.) The Best Possible Training Is Available- Usually the current owner is happy to give his successor advice and insight based on his years of experience. The current owner has a vested interest in your success.

If he has financed part of the sale price then obviously he wants (and needs) you to succeed. But even if you paid cash, the business is something he has poured his heart and soul into for years so he will still be very interested in helping you succeed - he doesn't want his pride and joy to fail even after he has left.

There is no way to have this valuable (and free) training available to you if you start a business from scratch.

The specific length and type of training the seller will provide may be negotiated as part of the overall sales arrangement. As an example, the seller may commit to stay and work with you for 6 months and then be available for consulting for 12 months after that.

And don't overlook the fact that when you buy a business you inherit trained, knowledgeable and experienced employees.

To customers, your employees are the face of you company. It's hard to overestimate the value of the insights and experiences these employees already have, not to mention the importance of the relationships they have built over the years with your brand new customers.

4.) Financing Is Often Easier - More often than not, a small business purchase is financed by the seller. There is no stronger vote of confidence in a business than when the current owner is willing to finance a significant portion of the selling price - and thereby remain dependent on the business' continued success for years to come. If you plan on starting a business, you will have no financing options as attractive seller financing.

(Note: even in the best case scenario, you should be prepared to pay down 30% or more of your own money).

5.) There Are Always Good Businesses For Sale! - All the above leads to an obvious question:

If a business is successful and the owner believes it will remain so, why would he sell?

That is a valid question that the skeptic in you should ask each time you look at a business.

Some businesses for sale aren't worth buying - at any price. But many successful businesses with a bright future are put up for sale every day. The most obvious reasons for this are the health and/or retirement of the owner.

Other businesses are put on the market because partners have decided to dissolve their partnership and go their separate ways or get divorced. The reason for the sale may be as straightforward as the owner is bored and wants to do something new with their life.

And then there are those best case scenarios where the owner is selling in order to pursue other successful ongoing ventures - winning is a habit and often the most attractive companies are being sold by an owner with other successful companies that require their full attention. The reasons for a business being put up for sale are as unique as the individual selling them.

There are great opportunities out there right now with owners who have valid reasons for selling and who are willing to provide training and financing. Making the decision to buy a business can put you in a profitable position sooner and with less risk than almost any start up opportunity you may find.

Patrick Jennings is the founder of several web sites related to the buying and selling of small businesses includinghttp://www.TheBizSeller.com - a for-sale-by-owner site that helps you sell your business as fast as possible and without using a broker. Searchhttp://www.thebizseller.com/browse2.htm to find businesses for sale by owner.

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