Is Buying An Existing Business Easier?

Buying into an existing business gets you an existing client base. It can also bring you in an armful of problems. Before you buy, consider these key points.

Business Structure. When you buy a business, the structure is already in place. The customers of the business are already “trained” to expect certain things. If there are employees, they work the way they’ve been taught by the previous owners. Systems are in place. The easiest way to tell how strong the structure is would be to actually work in the business for an extended period of time with the current owner (several months). See how he works. Hear how he speaks to his customers and employees. Have him go into detail on his systems.

You are in charge of determining the systems that will run your business. You can model others you know and respect. You establish the systems, and run them your way.

Financials. How good are the numbers of the business? What are the sales? The expenses? The net profits? Accounts receivables and payables? These numbers are important when you are evaluating the overall strength of the company you are considering. But also look at other more hidden numbers.

What amount is spent on marketing? What type of marketing is being done? How many clients are in the selling company’s database? The stronger the current owner is with his overall business practices, the more successful you can hope to be.

When starting your own business, you have no income and no expenses. Everything must be built from scratch. Don’t expect to make money from the business for months or even a year or so. As the money first comes in, you will put that money right back into the business: purchasing marketing materials, improving your sales literature and props, etc.

Timing. Why is the existing owner choosing to sell the business? The real reason and what she tells you may be completely different. Spending time with the current owner will usually divulge the real reason. This reason may be the difference between success and failure. If she’s’ retiring, and there’s still a thriving population coming to her business, you have a greater chance for success. However if she’s “retiring” because the population around her is aging, and it’s taking away from her wedding business, you will be fighting an uphill battle.

No matter what type of business you’re in, timing is everything. Research your area, and discover whom you will sell to and what they will buy.