|
By Richard Parker, President of The
Business For Sale Buyer Resource Center™ and author
of the most widely used reference resource and strategy
guide for buying a business for sale - How To Buy A Good Business At A Great
Price©
Why Buy an Existing Business?
With so many options available to you, the question
will become which vein of the business- ownership arena
should you pursue? Between franchises, existing
businesses, start-ups, home- based businesses and MLMs,
it does become a bit overwhelming. When reviewing all of
the possibilities you have to decide what will work best
for you; however, your chances of success are clearly
best when you buy an existing business or franchise
resale for many reasons. With any new business you have
two challenges: developing the product or service and
then seeing what, if anything, people are willing to pay
you for it.
Regardless of a company's past performance, an
existing business or franchise will, at the very least,
have a history from which you will be able to make
certain decisions. Even if the company was not profitable
in the past, your strengths may lend themselves perfectly
to turning it into a viable venture. Furthermore, you
have the ability to verify what the company did in the
past that resulted in the current status of the
operation.
Ease of Investigation
In order to buy the right business or franchise, you
will be required to do a thorough investigation of its
past activities, its operations, its current status, the
competition, the industry and its future potential. You
will accumulate this information and then you will have
to determine how it measures up with you at the helm.
Clearly, this information gathering will be substantially
more accurate and easier to obtain when dealing with an
existing business or franchise, as you will have the
resources available from which to get the details.
Infrastructure
You will have the benefit of purchasing a company that
has an infrastructure, including customers, suppliers,
employees, equipment and systems. This will allow you to
focus on building the business as opposed to a start-up
or new franchise where everything begins at from point
zero.
Purchase Price Differences
Buying an existing business or franchise does not mean
that it will cost you more. In fact, many times it's
less expensive than building a new franchised location or
launching a start-up. Even in those cases where it may
require a premium, at least you know what you are getting
if you investigate it properly. With a new franchise, a
good Master Franchiser will do demographic studies on
population, drive-by traffic, potential customer base and
a whole series of studies that will indicate that
"theoretically” the business should do well.
However, the only thing they cannot guarantee either by
law or in reality is whether or not you will be
successful. Also, new locations can take a year or more
to build. You can avoid all of this when buying a
resale.
Flexibility in Negotiating
You will have far more flexibility when negotiating
the purchase of an existing business or franchise versus
any other options available; it's not even close!
Everything from the purchase price to financing is open
to negotiation. Doesn't it make more sense to put
yourself into an environment where you have the greatest
number of options available?
» Back to
Articles TOC
About the Author
Richard Parker is President of Diomo
Corporation - The Business Buyer Resource Center ™
(www.diomo.com ) and Diomo Solutions,
LLC (www.diomosolutions.com) He is the
author of How To Buy A Good Business At A Great
Price© a 600 plus page how to strategy guide
geared for anyone thinking about buying a business. His
materials are used by prospective business buyers in over
50 countries. Mr. Parker's articles, syndicated
columns and other "how to" guides have been
published extensively online and in various print media
He is also one of the most successful business brokers in
The United States, assisting both buyers and sellers. Mr.
Parker has personally purchased ten small businesses
since 1990. Email
your comments to Richard or visit his
website
This article is © Copyright 2005-2006 by Richard
Parker and may not be reproduced in any format whatsoever
without prior written consent of the author.
The recommendations of reading, reference materials or
links mentioned, are for general informational purposes
only. The materials are intended as a public service and
are not a substitute for obtaining professional advice
from a qualified firm, person or corporation. Consult the
appropriate professional advisor for complete and
up-to-the-minute information. These materials do not
constitute the rendering of any legal or professional
services.
|
