By Bruce Hakutizwi
The American entrepreneurial spirit is an overall positive force. Thanks to “can-do” ideology and brash persistence, tycoons have laid the foundation for business prosperity in the modern age. While this bold narrative is easy to rally behind, and inspires afternoon daydreaming of a generation that pulled themselves up by their bootstraps, it is only a chapter in the much larger book of entrepreneurship. In reality, business ownership can be much more inclusive than many people are led to believe, and getting your foot in the door doesn’t have to start with laying brick.
There are advantages to starting a business from scratch, but there are also advantages to buying an existing one. Many people, especially first generation owners, find the latter far more accessible. If you have a smoldering entrepreneurial enthusiasm, but you’re feeling held back by the daunting undertaking of starting a new business, consider these three perks to buying an existing business.
1. Instant cash flow
If a business was worth considering in the first place it likely has a record of money making potential. Starting from nothing is not only expensive but also rarely turns a profit right away. When you purchase a business, it comes with a lot of money making power — you will gain the workforce, building, equipment, clientbase, etc. This means there should be little to no lapse in revenue when taking over an existing business. You will benefit from any momentum the business has already established and be able to avoid the common, costly new business slump.
2. Branding is taken care of
One of the most valuable assets a business has is its brand. You will gain a significant head start by adopting existing marketing, advertising, recognition, and third-party contacts. As n business owner, starting with an immediate foothold in the community is an invaluable advantage that cannot be replicated. Achieving a recognizable brand can be a long and difficult process, which makes it a valuable asset to own out of the gate. Don’t discount the value of strong branding when deciding whether or not to buy a business.
3. Systems and infrastructure are already in place
While this might be one of the least flashy advantages, it is also one of the most beneficial. Buying a business means you can build off the momentum already established by a previous owner, and many logistical kinks will have already been worked out. Behind the scenes elements like employee workflows, IT systems, payroll, and infrastructure modifications will already be in place. With this crucial operational framework already established, all that is left for you is tweaking and improving as you see fit and letting the business grow from there.
I want to buy a business. What’s my first step?
Maybe you’re sold on why buying an existing business makes all the sense in the world, but an important question remains: how? These advantages will do you no good if you don’t know where to start. There are several possible routes when throwing your hat into the market, but it is important to know which one will work best for your individual needs.
It is common for buyers to use a broker. A broker will do all the heavy lifting for you — search for deals, represent your interest in negotiations, etc — but keep in mind that they take a 5-10% commission. If that expense is in the budget, and worth mitigating effort on your end, using a broker is a great option.
Many prospective buyers choose to do the work themselves and search for sales through a business listing website. These sites work as a central, online hub that connects buyers with sellers. Using a website curated specifically for buyers helps cuts out the middleman. Shopping for sales online is easy, and streamlines the process by taking out the guesswork.
Using a hybrid of these two methods works well for others, too: they will handle the initial searching and vetting of opportunities themselves, then bring in a business broker to look everything over and assist in closing the deal.
No matter which purchasing route you take, the first step to satisfying the entrepreneurial spirit is recognizing options. Not everyone is meant to start a business from nothing, and it is important to recognize alternatives. In most ways, taking over an existing business is just as gratifying and has greater financial potential.
Bruce Hakutizwi is the U.S. and international manager of BusinessesForSale.com, a global online marketplace for buying and selling small- and medium-sized businesses. Bruce manages business development, account management, content building, and client acquisition and retention in the United States, Canada, South Africa, and Europe. He frequently writes about entrepreneurship and small business ownership. Find him on Facebook, Twitter, and LinkedIn.