Step 1: Should I buy a business?

Consider all of the possible advantages and disadvantages of buying a business before making a decision.

What are the advantages of buying a business?

  • You could find a well run established business with a solid client base, an equiped premises and a good lease.
  • The initial establishment and ground work has been done.
  • The business will have a proven financial track record which could make getting a loan easier for you.
  • A market for the product or service will have already been demonstrated and a marketing plan maybe in place.
  • There may be existing customers, a reliable income, a reputation to capitalise and build on, and a useful network of contacts.
  • If there are existing employees they will have experience you can draw on.
  • Many of the problems will have been identified and hopefully solved already.

What are the disadvantages of buying a business?

When buying a business keep in mind that not all businesses for sale are good businesses. Some are run down, some badly managed, others poorly located or perhaps suffering from recently introduced competition. Any of these characteristics could offer an opportunity to develop the business or it could be a big risk. Other aspects which could be a disadvantage are:

  • You often need to invest a large amount up front, and will also have to budget for professional fees for solicitors, surveyors and accountants.
  • If the business is not running at an optimum level you may need to invest quite a bit more on top of the purchase price to give it the best chance of success.
  • You will need to honour or renegotiate any outstanding contracts the previous owner leaves in place.
  • You may inherit negativity from existing staff.

What's next...

Related Information

Business Brief to view:
Buying a Business


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