Buying a business
Last updated on October 24, 2016
If you're thinking of buying an established business, there are some important things to consider.
Advantages of buying an established business include that:
Disadvantages of buying an established business include that:
- a proven track record lessens risks, increases the likelihood of success, and may make finance easier to obtain
- immediate income is available from sales to the existing customer base
- the business is in a proven location
- stock is already in place and suppliers are established
- equipment already exists and its capabilities are known
- present employees may provide valuable assistance
- the previous owner may provide experience and, possibly, finance.
Disadvantages of buying an established business include that:
- it’s hard to assess goodwill
- there’s a chance you could be misled and end up with a ‘lemon’
- you may inherit a poor public image
- the loss of the previous owner’s relationship with customers may affect sales
- the existing location may not be adequate
- there may be problems in the relationship with the landlord
- stock and equipment may be out-of-date, damaged or out-dated
- employees may be unsuitable or poorly trained
- it may be difficult for you to introduce change
- unexpected expenses may arise if the business is run down.
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