5 Reasons to Buy a Business vs Starting from Scratch

Are you an aspiring business owner? Do you want to work for yourself and own your own company?

The benefits of being a business owner attract all types of people to put in the time, work, and money to make it happen. 

But perhaps the biggest question at the beginning is this —

Should you start a business from scratch? Or buy a business?

Obviously, there are arguments on either side, but for most, buying a pre-existing business is the most advantageous option. 

Unless you have millions to blow on a startup or a revolutionary idea with the capital to back it, chances are you will fare better buying a business that’s already up and running.

Check out our 5 Reasons to Buy a Business vs Starting from Scratch.

1. The business is ready to go!

With the exception of some tweaks you may want to put in place, buying a business already in operation means that the engine is already running — you’re just getting the keys to the car! 

When buying an operating business, the seller will simply transfer ownership to you. All the equipment, supplies, the website, etc. are ready to go. You can implement the changes you want as you want to make them. 

When starting a brand-new business, owners spend a lot of time and money on design, supplies, and expensive equipment. Usually when purchasing a business, equipment is valued lower than the purchasing price, so you get a bargain along with saved time and stress.

2. Branding

To go along with the ready-to-go aspect, a huge headache you save when buying a business versus starting one is the hurdle that is branding. The branding of a business involves everything from website and logo to the colors you use and the tone of voice you employ in your written materials. 

People pay top dollar to marketing professionals to execute a branding strategy. It can often be a costly and frustrating endeavor if you don’t find the right people or don’t have a good idea of how you want your brand to ‘feel’.

If you’re buying a business that’s already operating, already successful, then you know the branding works!

You don’t have to go through the exhaustive process of finding out how you want your brand to sound, feel, and look. The work’s been done for you.

That said, sometimes new owners want to take the brand in a new direction and will purposely buy a business with the intention to rebrand. Even doing this will save time and money, since you’ll have a base to go by. You can figure out what works and what doesn’t from there.

3. Market Tested

When you buy a business that’s established, you’ll have a solid sales history to look at. You’ll be able to see how the business has been performing according to the cold, hard numbers. You can figure out what products and services work and which ones you should toss.

You’ll also be able to see what can be improved upon because you’ll have a definitive benchmark, a starting point with a chunk of data to work with.

On the flip side — If you start a business from scratch, it can be difficult to accurately project how your business will perform. 

Startups engage in expensive market research and analysis to figure out how they think they will fare in the current market. Or worse, they do minimal research and wing it.

With an established business, the market research has already been completed, and the proof lies in the financial history. No outlandish projections. No overhyping. Just solid data that can give you the assurance you need to make an investment.

4. Established Customer Base

Perhaps one of the biggest hurdles every new business owner faces is getting customers and keeping them. It costs significantly more to obtain a new customer versus retaining an existing one, so customer loyalty cannot be undervalued.

When buying a business that’s up and running, your established customer base is already there. You already have a reputation you can build on. People already know what you do and where to find you. Getting to that place takes countless hours and serious cash, time, and money you’ll be able to apply elsewhere.

5. More Value

At the end of the day, buying a pre-existing business tends to be kinder on the wallet than starting from scratch. 

We already touched on this with equipment —

When you buy an established business, let’s say a cafe, the equipment you purchase will not be valued at the buying price. You essentially get to purchase the supplies at a fraction of what they cost in the marketplace. 

You can usually see ROI more quickly by buying a business than with a startup.

Also, it’s much easier to get financing when purchasing a business versus starting from scratch. Investors and financial institutions are much more comfortable with solid data from sales history than projections from an untested company.

Next Steps

If you want to be in business for yourself, you need to be sure you’re ready for the time, the investment, and the large amount of work it will require. That said, the freedom of being your own boss is what draws most to business ownership in the first place. You can make your own hours and create your own path. 

Now, it’s time to decide whether you want to start a business from scratch or buy a business that’s already up and running. At the end of the day, it’s simply less risky to do the latter.

Are you buying a business in Perth? Do you have a Perth business for sale? For more information on how you can get the best results, contact Angela at Advance Business Brokers today.