Build vs. Buy

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 Starting a successful business doesn't always mean starting from scratch. Taking over an existing small business can be the key to your success. Opting for this route offers significant advantages, including reduced risk compared to building a business from the ground up. 

Shockingly, statistics reveal that around 20 percent of small businesses fail in their first year, and approximately 50 percent face failure by their fifth year, as reported by the Bureau of Labor Statistics Business Employment Dynamics.

Purchasing a cash-flow-positive business reduces risk while creating opportunities for tremendous profit.

Why it’s a good time to buy?

Over the next 15 years, retiring business owners will sell or bequeath $10 trillion worth of assets held in more than 12 million privately owned businesses, according to the California Association of Business Brokers. 

What does that mean for you? More than 70 percent of those businesses will likely change hands, offering significant investment opportunities for those looking to buy a business. 

Why buy a business?

There are many reasons to consider purchasing an existing business rather than starting one. Here are the top five:

Proven Concept

Established businesses have already done the research and spent the time to build a proven system - they have a track record. When you buy in, you benefit from their experience and the work they’ve done to build their systems.  and having the experience to have is less risky – as a buyer, you already know the process or concept works. 

Recurring Customers

A recurring customer base is essential to the continuing viability of any company. It takes years to build a loyal customer base. Buying an existing business has already established these relationships for you. 

Buy Time 

Building a business from the ground up takes an incredible amount of your time. You have to come up with a business plan and develop the systems and processes to implement it. Not the mention the time it will take to market the business and establish a customer and vendor base. When you acquire a business, this work has been done for you. Although you’ll still need to ensure the systems and processes continue to work well, you won’t have to spend your time 

Cash Flow

Typically, a sale is structured so you can cover the debt service, take a reasonable salary, and have some left over to take the business to the next level. On the other hand, start-up owners often “starve” at first. Some experts say start-ups aren’t expected to make money for the first three years.

Easier to Obtain Financing

While risk is still involved in buying a business, lenders and investors see it as a lower risk than a start-up. This is due to a history of financial performance that a lender or investor can use to gauge how the business has performed to date and predict future performance. It also helps with existing data about the business's market position and customer base.

Regardless of how you become a business owner, risks are always involved. However, when you buy an existing business, you’re taking a calculated risk that eliminates many of the pitfalls and potential for failure that come with building a business from scratch.

 At BizNavigators, we take pride in our dedication to finding you great business opportunities, minimizing risks, and facilitating a successful transition into business ownership. Our mission is to make the process of buying a business as seamless and rewarding as possible, so you can focus on achieving your entrepreneurial dreams. 

Click here for our current business listings and see if there’s a match for you.