If you’re ready to leave your unfulfilling career behind to become your own boss and you’re not quite sure of what you want to offer or sell, buying an existing business may be a great option. But just like for a startup, there are pros and cons to consider before taking the plunge. E-City Beat presents a list of positive and negative outcomes to help you decide if buying an existing business is the right move for you.
The products or services you sell are already market-tested. You know there is a need for what the business is selling, and you can generate more sales by allocating money for online and offline advertising. The Digital Marketing Institute suggests investing in online marketing strategies like SEO, social media ads, and retargeting ads that will expand your reach and take your products and services further. You can also advertise the change in business ownership in your local newspaper or on your local radio station to bring renewed awareness to the brand.
Your clientele is already established. Introduce yourself as the new owner by offering special discounts and promotions to your existing customers. If you’re planning on introducing new products or services, give free samples to garner interest, and ask for feedback–positive and negative–that will help you decide if you should expand your offerings or stick with the products and services that already bring you revenue.
Your brand is already established. If the existing business you’re planning on buying benefits from great brand recognition and has a strong online presence, all it takes for you to keep it going is to regularly post fresh content online to retain the attention of your followers and to connect with other companies for cross-promotions and co-branding in order to increase your exposure.
Your supply chain is already in place. Unlike starting a business from scratch, which would not only involve deciding on a business structure, finding funding, and filing all the proper documentation with the state, but also finding suppliers for your materials and equipment, buying an existing business lets you skip all those steps, bypass the “trial-and-error” phase, and go straight to the fun of running a successful venture of your own.
Deal Studio notes that it’s difficult to appraise an existing business. You’ll have to figure out what made the business a success, and how to keep that momentum going once it changes ownership. Some businesses have valuable assets but don’t generate much revenue, whereas others have fewer assets but generate a lot of money. For this reason, projecting future earnings may be a better way to valuate a small business.
Your equipment and software may be outdated. Buying new equipment will add to your startup costs, and you may have to invest in training, for yourself and for your employees, to learn how to use it. If you’re dealing with older proprietary software, you may have to hire a computer programmer to redesign programs that will work on the newer operating systems found on the market.
You may have to roll out new processes and technologies. If you’re buying an older business, chances are its website is not yet equipped with integrated customer relationship management and enterprise resource planning systems. You’ll also have to update and optimize the website for faster page loading, and to allow customers to buy directly from your site using API banking.
You may have a hard time making it “your” business. Personalize it and make changes that are more reflective of who you are and where you want the business to go. For example, you can redesign the company logo to make it your own. If you’re on a tight budget, use an online business logo creator to design one yourself instead of hiring a graphic designer.
Buying an existing business can be a profitable endeavor. Thorough knowledge of the products and services you’re offering, along with an understanding of social media advertising, will help you grow your company and increase brand awareness as you put your own stamp on it.