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  • Mike Lightfoot

Ten reasons why buying a business is better than setting one up

Updated: Aug 26, 2020

This is another question we get asked a lot. Why should I buy a business when I can always just set my own business up? So here we give you 10 reasons why buying a business is often better than starting up from scratch. As you can see there are pros and cons to both buying a business and a start up situation - but for many people the positives come down firmly in the buying camp.


1. Easier to secure finance


If you need to borrow money to set up a business then most lenders are more inclined to lend money for the purchase of an established business rather than supporting an unknown start-up. From their point of view, there is less risk involved in financing a business that has already proven it is able to generate an income.


2. Income from day one


Most start-ups go through an initial phase when they do not generate an income – for some, this can be three years or more. During this period, it may be necessary to shell out money for the premises itself, equipment and it's installation, initial stock and materials, fixtures and fittings, legal and professional fees, a license, uniforms ... the list goes on and it all adds up.

Without good finance in place (or having an alternative income) this stage can be tricky for new business owners and it is easy to become demotivated. With an existing business somebody else has already gone through that stressful process and therefore the risks are less.


3. Established brand


With an existing business you are buying into a recognisable brand with a track record, complete with all the trademarks, copyright and websites associated with it. This gives customers, suppliers, lenders and other contacts a confidence in your business that they may not have when interacting with an unknown start-up. There might also have already been a substantial investment into building social media channels and establishing a follower or referrer network which can take a considerable amount of time and money to build up from scratch in a start up business.


4. Instant customer access


Similar to the above. An existing business also has customers at the ready. You can use various strategies and marketing to build on that customer base but you don’t have the task of building it from scratch.


5. Established network of contacts


A large chunk of the time and energy involved in starting a business goes towards establishing a network of contacts. Good supplier and marketing contacts are a valuable asset to any business and if your new enterprise has some on their books, you will hit the ground running. In addition, like money lenders, suppliers and marketing companies are more likely to offer favourable terms to a business that has been around for a while.


6. Focus on growing the business


With a start-up, an entrepreneur has to channel all their energy into getting the business off the ground and this can be time-consuming and exhausting. In contrast, taking over an established business means you are free to focus on the particular parts of the business that most need attention, aiding the growth of the enterprise as a whole.


7. Income to put back into the business


With a start-up, lack of finance to do what you really want with the business can be frustrating. Cash is eaten up in buying the resources needed to get things up and running, and dreams are left by the wayside. With a steady income from an established business, you have more freedom in how you choose to re-invest this money.


8. Trained employees in place


Just as it takes time to build up a network of suppliers and other contacts it also takes time to build up and train a team of employees. These people are already in place in an existing business. This can make it easier to implement strategies for growth and development. It also means there is a trained team that can keep things running if you want to take time off.


9. Less risk


There is obviously less financial risk for lenders involved in buying a new business and it is also a safer option for the potential business owner. Providing the business is doing reasonably well, it should continue to do so. In contrast, starting a new business is a jump into the unknown as far as financial security is concerned.


10. Less work


Starting up a new business can often become all-consuming. With so much to do, it is easy to allow the business to completely take over your life. Those who don’t have huge amounts of passion and energy for the business can find that they begin to resent this. Taking over an established business means that business practices have been streamlined and with existing employees who know the ropes it shouldn't be necessary to work around the clock.





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