The advantages and disadvantages of buying an existing business.
If you take on an existing business you will be taking on the legacy of the previous owner of the business and you therefore need to be very aware of every aspect of the business you’re about to buy.
Advantages of buying an existing business.
Some of the hard work will already have been done in getting the business up and running.
Finance may be easier to obtain as the business will have a proven track record.
A market for the product or service will have already been demonstrated.
There may be an established pool of customers and good will and useful contacts in place.
A business plan and marketing method should already be in place.
Existing employees should have experience you can draw on.
Disadvantages of buying an existing busines.
You often need to invest a large amount up front, and will also have to budget for professional fees for solicitors, surveyors, accountants etc.
If the business has been neglected you may need to invest quite a bit more on top of the purchase price to give it the best chance of success.
You will need to honour or renegotiate any outstanding contracts the previous owner leaves in place.
You also need to consider why the current owner is selling up.
Think about the feelings of current staff – it’s possible they may not be happy with a new boss, or the business might have been run badly and staff morale may be low. There may also be legal considerations about taking on existing staff, especially if they have new roles.