Plenty of people dream of owning their own company. When it comes to running your own business, you have two initial options. You can create and launch your own business, from scratch. Or, you can purchase a business that already exists. While the world needs new companies and startups, there is also plenty of room for people to move into entrepreneurship by purchasing already established companies. If you are considering starting a business, here are a few reasons why it might be worth it to buy one.
The company you purchase should have a proven or established product that people regularly buy and use. Purchasing an established company minimizes your need to do market research to make sure that the product or service you plan on offering is viable and something that people will actually want to purchase.
Established Employees and Systems
Starting from scratch when you launch a new company means finding a team that’s best suited to helping you run the business and figuring out which systems and methods will help you run it most efficiently and help you plan for the greatest growth. If you purchase a company, it often comes with employees who know it well and who can help you get acclimated to the ins and outs of running it. Having experienced and knowledgeable employees in place means that you won’t have to conduct interviews or a search for a reliable team.
While there might be some stress or strain as a business changes hands, for the most part, employees might be excited about a change in ownership, as long as they get to keep their positions. You can use the fact that you’re buying the company as an opportunity to interview the current staff and get to know what they think works about the day to day operations and where they think there is room for improvement or changes.
Existing Customer Base
Having loyal customers, or not, can make or break a company. When you buy a business, you are also, in some ways, buying its customers. You won’t have to work from the ground up, wooing people over to your company. Purchasing a company means purchasing it’s reputation. For that reason, you want to do thorough research before you buy, to make sure that the business has a good, loyal customer base and that people consider it a trustworthy company, one that they are happy to work with. Purchasing a company that has a bad reputation or few customers might actually be more of a challenge that trying to start your own company, as you have to work against people’s preconceived notions, rather than create an idea of your business for them.
It’s typically easier to put a value on an existing business than to it is to put a value on a business you haven’t started yet. You can look at the company’s sales and profits and clearly see what it is worth. Having a concrete value makes it easier for you to obtain financing for the company, too. It also gives you a fair idea of whether or not the business is worth purchasing or investing in.
Room for Growth
Although an existing business might come with a built-in product, established customer base, and clear value, it is not set in stone. As the new owner, you’ll be able to develop a new strategic plan for the company to take it to the next phase of growth. Since the company is already established, there is less pressure on you to produce tremendous growth right out of the gate. You have time to become acclimated to owning the company, getting to know its products, employees, and customers, before you begin to plan for growth.
If your goal is to purchase an existing business, either as your first company or to supplement a business you already run, the team at New Direction Capital can help. We’ll work with you to determine the business’ value and to put together a plan for growth. Contact us today for more details.
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