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What are the financial pros and cons of purchasing an existing business?
Rather than franchising, I would like to buy another business. What are the financial advantages and disadvantages of purchasing an existing company?
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While the actual answer is relative to the buyer, the seller and the performance of the business being sold or the industry being represented here is a good rule of thumb...
Buying a business with an existing and loyal customer/client base is a good idea if the customers/clients can be retained by the new ownership as long as the profitability can be confirmed and the reason for the sale is less than suspicious.
As a consultant I advise my clients who are considering buying an existing business to complete ample due-diligence before doing so. Often it is best to start a new business entity and absorb through buy-out any competition who is willing to sell. This way you control the infrastructure and the integrity of all business functions.
Buying an existing business is liking to buying a used car, it can be a great deal or it can turn out to be a lemon! Consider the industry and demographics carefully and do your own due-diligence.
Just my food for thought!
Johnny Giles
http://www.expertbusinesspresentations.com
704-315-5149
cre8ivejg@yahoo.com
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