Share this article:

The Benefits of Buying an Existing Business

If you're on the lookout for new business opportunities, consider the benefits of taking over an existing operation with a proven track record…

There’s a school of thought that if your business can’t survive without you in it, you haven’t got a business, you’ve got a job. For many small organisations, that doesn’t really matter. Those that operate in the lifestyle field may just want to ensure that they make enough money to survive month on month and then have a little tucked way for retirement.

But just because you’re a small business however doesn’t mean that you can’t think big – and that means taking a leaf out of the big boys (or girls) book. Those at the top of their game will always be thinking about an exit strategy – how long they plan to operate, how long they want to stay working – and what to do with that business when the time comes.

The truth however is more modest organisations – or even those who operate as a sole trader - often don’t realise the value of what they’ve created and simply decide to shut up shop. This not only leaves their customers high and dry but also means they’re missing an opportunity to sell a real asset – which includes everything from tangible stock to good will.

At the other end of the scale, there may be many people who want to go it alone but don’t know quite how to start, so buying a business that is a going concern is definitely a worthwhile consideration.

Mergers and acquisitions

You may have spotted some sellers on outlets such as Etsy who often buy through WTTB and then sell on to their customers. It’s a great business model because you can lay out your stall and promote your offering, but you don’t have to spend lots of cash on stock – you just get the bespoke items as the orders come in.

If you’ve spotted someone else running the kind of business you’re interested in, then why not approach them directly? You never know but they may be open to offers. It means that you purchase their goodwill, their expertise and – most importantly – their existing customer base, which puts you in a strong position.

Long term you may also want to consider a merger with other similar companies – or building your very own empire by gradually bringing more and more organisations under your name. That may seem a huge step at this stage but as the saying goes, from little acorns great oaks grow, and looking to future acquisitions is always worth considering.

Safeguarding your interests

Of course before you do anything, you need to get some advice and check that the business you’re thinking of buying really is worthwhile. A check of their accounts should help put your mind at ease and you can always get some professional advice, just to ease your mind.

It may also be worth thinking about drawing up a “non compete” clause because the last thing you want is to hand over your hard earned cash, only to find the business owner has set up again and will be in direct competition with you.

If everything seems in place, then you can start considering the advantages. You’re not left wondering if your new company is going to fail, you will know that it’s already proven it can work. It also means that by having an established brand, you can then put your own stamp on it and build on its previous success. If you just want to keep the status quo then that’s fine too, it depends on what your own long term plans are.

If you’re at the other end of the scale – the person who is considering selling their business – then try to look at the situation from the buyers’ perspective. Small business owners often – understandably – have a very strong emotional attachment to their organisation and parting with it can be difficult.

However this is a situation where you need to think with your head and not your heart and if the offer on the table is something that is right for you and allows you move on, then it needs to be seriously considered. Be realistic about what your business is actually worth and how you can benefit from selling it on, quite apart from the fact someone is continuing your legacy.

Now is the best time to buy a business

Research shows that a huge amount of small businesses are owned by baby boomers and who are now hitting the age when they will want to retire. That then offers some great opportunities for would-be entrepreneurs.

Those people who were born in the 50s and 60s may have worked on their business for decades, so considering taking over from them comes with a proven track record, probably a strong customer base and hopefully a whole heap of loyalty. That can be a very attractive proposition and means that you can avoid some of the pitfalls that can occur when you set up from scratch.

There are many challenges around being self employed but there are also incredible freedoms and if you have the drive, the enthusiasm and the determination, then taking over an existing business may be just the thing!

Close
Close

Can’t find your sector?

We want to help all businesses find products tailored to their needs. We continually add to our list of industries - help us expand this library by entering your business sector below.