What are the benefits of buying a business versus starting one?
Starting a business involves a considerable amount of risk, including financial risks, competitive risks, and strategic risks.
Purchasing a company results in instant profits, so you don’t have to worry about cash flow as you get the business running under you.
If you’re considering buying a new business, we’re here to help. Here are nine reasons to buy a company versus starting one up.
9 Reasons Why Buying a Business Vs. Starting a New One is in Your Best Interest
1. Considerably Less Risk
When you buy a business, your purchase already has a market base, customer base, brand recognition, and proven growth and success.
Most startups fail within the first five years.
The risk of failure is very high when you start a new business. You don’t have the same resources, and there is much less stability.
If you purchase a business that is already lucrative, it is less risky than starting your own. The company already has a strong foundation, meaning you will have less financial stress.
2. Several Financing Options Are Available to Purchasers
There are multiple ways to structure a purchase deal. It doesn’t have to be through cash or a loan.
Purchasing an already established company offers many more financing options than starting a new one, which is a benefit you can take advantage of.
3. Brand Recognition
When you purchase a company, the business comes with an established brand. There is no need to start from the ground up.
You won’t have to focus on brand building or investing considerable money into marketing, trademarks, and copyright. This opens up time to focus on other essential parts of the company.
4. Instant Customers
A business is nothing without the people it serves. A pool of current and past customers is an invaluable asset.
Not only will you avoid the costs associated with marketing and establishing a new brand, but you already have a customer base you can work with and build off of.
Instant customers are an invaluable asset for any company to have.
5. Instant Sales
Remember those customers above?
They stayed around for a reason – for you to sell to them. This means you will get sales immediately without spending the time or money required for startups to get sales.
Which brings us to our next point.
6. Instant Profits
Instant sales mean instant profits. It is rare for a startup to start making sales and profits immediately.
While many businesses are profitable, the degree of profitability depends on many factors.
Taking your processes and systems and integrating them into the foundation of an established company leads to growth and gain.
Simply put, most startup businesses fail because of money issues. It takes a lot of money and risk to start a business. Instant profits are never guaranteed.
7. Instant Contacts
With an already proven and loyal customer base comes the contacts that accompany them. It also means instant connections with other businesses and partnerships the company has already established.
Marketing efforts become exponentially reduced when you have a base of clientele and resources to build from.
8. Instant Systems
Systems work. Not having to start a system from scratch or being able to build from current systems saves you time and money, allowing you to scale and grow faster.
An already established and successful business has proven systems with a good track record.
9. Instant Employees
Your growth includes being able to utilize the knowledge and know-how of people who have contributed to the success of a business.
Not having to train new employees in the systems and processes of the company, as well as building employee relationships with customers, helps your business flourish.
Why Buying is In Your Best Interest
Buying a company is an excellent way to build on an existing business. Existing businesses are already profitable, which opens up countless opportunities for growth.
Startups have limited cash flow, which is why many new businesses fail within a few years.
By acquiring a new company, you gain access to all the people and systems working there. The business already has a strong foundation and foothold on the market, which limits the risk of failure and guarantees success.
Merging companies – or acquiring a new one – can bring about many new opportunities.
Even better, merging businesses brings value to both companies that are collaborating. Combining two companies in the same business space also produces the potential for growth and opportunity.
Don’t Miss Out on a Great Opportunity
Over the next ten years, it is estimated that 50 million baby boomers will retire. Over ten million of these people are business owners, which means it’s a great time to start looking around for potentially profitable businesses that are gearing up to sell.
Buying a new company is also a great way to pivot into new industries, providing new opportunities for the growth and flourishing of new business.
The lawyers at the Contiguglia Law Firm can help you grow and scale your business through the buying and selling of other companies.
Our team can help create a Purchase Agreement that sets forth the deal of the term of your purchase. We can help you close the deal and structure the business in a profitable way.
Our lawyers also help draft an LOI (Letter of Intent) to determine the purchase price, deal structure, expectations, closing, and other vital details.
Our skilled business law attorneys also help potential business owners complete due diligence to validate the purchase price of a new company and determine the value of assets and liabilities of the company.
Hire a Legal Expert if You’re Considering Buying a Business
When buying a company, it is critical to use the services of a business law attorney or specialist to determine how much you should pay for a business. The lawyers at the Contiguglia Law Firm can help determine a deal structure that benefits you the most.
Whether you own a startup business, family business, or any other type of business, it is critical to speak to a financial professional, business professional, or business law lawyer about whether an acquisition is the right decision for you. Without the right plan, research, and understanding of how an acquisition can affect your business, your organization could be at risk.
Start with your free, confidential consultation to discuss your next business purchase.
Hiring a legal expert can help ensure you make the right decision while protecting you from disastrous errors.
Need a lawyer for your family business? Call 303-780-7333 or schedule an appointment for a free consultation.
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