Advantages:
The main reason to buy an
existing business is the drastic reduction in start-up costs of time,
money, and energy.
In addition, cash flow may start immediately
thanks to existing inventory and receivables.
Other benefits
include pre-existing customer goodwill and easier financing opportunities,
if the business has a positive track record.
Disadvantages:
The biggest block to buying a
small business outright is the initial purchasing cost. Because the
business concept, customer base, brands, and other fundamental work has
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. |
