For a sophisticated investor, buying a business is often more attractive than starting one. By purchasing an existing business you acquire cash flow and profit; have an existing customer base and, generally, employees. The benefits are that you do not have to set up new procedures and structures; acquire capital goods and start from scratch. The downside is that buying a business will often cost much more than starting one and there will be additional risks associated with a new business. Many investors feel more comfortable buying a business that has a proven track record. Also, in buying a business you will receive everything owned by the business: patents, machinery, equipment and capital goods.
Sometimes business brokers are hired to locate a business that is available to purchase. Sometimes businesses become available through word of mouth.
Before buying or selling a business consult with a business attorney to review all the contracts. You will also want a competent, experienced CPA to examine the financial statements and help you with your own financial projections.
There are many complex risks associated in buying, selling and valuing a business. If you are considering buying or selling a business first consult the expert business attorneys at Givner & Kaye. (310) 207-8008
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The key factor is price. Buying the buseinss at the right price can save money in the long run by giving you immediate clients, knowledgeable employees, product, inventory, vendors, and reputation. Don’t under estimate the value of reputation and clients in establishing a new buseinss. You can have the best product, but as an unknown, many clients may not be willing to switch until they see you’re going to be in the market for while and until they can obtain references. So the decision comes back to price. Set up a best case and worst case buseinss plan for starting your own venture. Understand what it will cost. Then start negotiating to buy the buseinss. You will likely be able to get financing for the purchase which conversely could be difficult for a start-up. By having done the plan and negotiating you’ll have a comparison. After all a comparison of one is no comparison. +2Was this answer helpful?