If you think you have the chops to be an entrepreneur, but would rather not start with a new idea -- or just plain don’t have a new idea worth starting -- you may be a great candidate to buy an existing business instead.
While buying an existing business typically involves more upfront cost, it also presents less risk than starting from scratch. Financially, you’re looking at actual profit and loss records rather than rough estimates, and there’s a clear history of sales to point to. You may also acquire valuable patents or copyrights, or have the opportunity to drive a stagnant business in an exciting direction with your expertise.
Why founders sell businesses
It’s a common misconception -- a cultural stigma, even -- that if a founder decides to sell a business, there must be something wrong with it. Either it’s about to go under, or the financials are in bad shape, or the founders must know something you don’t, right?
In reality, founders sell their businesses for a myriad of reasons. They may be in a different life stage, and the needs of the business no longer match their lifestyle. Or maybe they’ve grown bored with the existing business model, or they’re excited about a new idea. The business they started may be a great one, just not one they are passionate about running day-to-day anymore.
But even when a founder is ready to move on, the decision to let go of something they built from the ground up isn’t an easy one. By finding the right buyer -- someone with the passion to take the business to new heights and the strategic mind to make the business perform well into the future -- a founder can move on comfortably, knowing the business they built is in good hands.
How to buy an existing business
Do you want to be the buyer that ushers an existing business into a new era of success? Follow these steps to move forward.
1. Decide what you're looking for.
2. Research available businesses.
3. Consider working with a business broker.
4. Complete your due diligence.
5. Acquire the necessary funding.
6. Draft the sales agreement
For more information, click here for a link to the full article.
Steve Niehaus, MBA, CBI, CM&AP