Buying a Business
Many find the idea of starting a business appealing, but lose their
motivation after dealing with business plans, investors, and legal
issues associated with new startups. For those disheartened by such
risky undertakings, buying an existing business is often a simpler
and safer alternative.
The main reason to buy an existing business is the drastic reduction
in startup costs of time, money, and energy. In addition, cash flow
may start immediately thanks to existing inventory and receivables.
Other benefits include preexisting customer goodwill and easier
financing opportunities, if the business has a positive track record.
The biggest block to buying a business outright is the initial
purchasing cost. As the business concept, customer base, brands,
and other fundamental work have already been done, the financial
costs of acquiring an existing business is usually greater then
starting one from nothing. Other possible disadvantages include
hidden problems associated with the business and receivables that
are valued at the time of purchase, but later turn out to be non-collectable.
Good research is the key to avoiding these problems.
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