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The Pros and Cons of Buying an Established Business

When considering the path to entrepreneurship, many people have to decide between starting a business from scratch or buying an existing company that has already been established. While both options have their merits, it is important that you think carefully and weigh up the pros and cons of each route before you take the plunge.

That being the case, let’s take a look at the pros and cons of buying an established business below.

The pros:

Existing Customer Base and Reputation

When you buy an established business, or even a franchise from Franchise Direct, then you are not only buying a business but also an existing customer base and their goodwill towards the brand. This is an invaluable asset that would otherwise take you tears to build up, so it is, perhaps, the biggest benefit of buying an established company right now.

A Proven Business Model

An established business typically has a proven business model and a history of financial performance. This can offer you far greater insights into what you need to do to continue making the business a success, where you need to invest in the future, and how much you are likely to make in the future – all good things to know at the starting point of your entrepreneurial journey.

Trained Staff

If you buy an established business, you will have access to a pool of readily trained staff who know what they are doing, so you can hit the ground running. This means you will need to spend less time and money on training and recruitment which is always a plus.

The cons:

It’s More Expensive

Buying an established business is obviously going to cost you more than starting a brand new one up from scratch because you are paying for all of the wharf work that has already been put into growing the company, along with its current customer base and brand recognition, amongst other things.

Hidden Issues

When buying a company that is already in operation, there is a potential for hidden issues to be uncovered down the line. Things like out-of-date practices or equipment, unhappy employees, legal disputes, and so on, can reward their heads once you have taken ownership and cause you problems you did not anticipate.

Less Creative Freedom

When you buy a company that has already been established, it could mean that you have to do things in a certain way to keep the company going which means you might not have as much freedom as you would like to make changes and do things in your own way.

As you can see, choosing to buy an established business has its pros and cons. While the benefits of inheriting a customer base, proven business model, and trained staff can be significant, the higher upfront costs and potential for hidden issues should not be overlooked. So, it is down to you to weigh everything up and make the decision that is right for you. Good luck.

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