Is
Buying An Existing Business Easier?
Buying
into an existing business gets you an existing client base.
It can also bring you in an armful of problems. Before you buy,
consider these key points.
Business
Structure. When
you buy a business, the structure is already in place. The customers
of the business are already “trained” to expect certain things.
If there are employees, they work the way they’ve been taught
by the previous owners. Systems are in place. The easiest way
to tell how strong the structure is would be to actually work
in the business for an extended period of time with the current
owner (several months). See how he works. Hear how he speaks
to his customers and employees. Have him go into detail on his
systems.
When
starting your own business, you have no structure in place.
You are in charge of determining the systems that will run your
business. You can model others you know and respect. You establish
the systems, and run them your way.
Financials.
How good are
the numbers of the business? What are the sales? The expenses?
The net profits? Accounts receivables and payables? These numbers
are important when you are evaluating the overall strength of
the company you are considering. But also look at other more
hidden numbers.
What
amount is spent on marketing? What type of marketing is being
done? How many clients are in the selling company’s database?
The stronger the current owner is with his overall business
practices, the more successful you can hope to be.
When
starting your own business, you have no income and no expenses.
Everything must be built from scratch. Don’t expect to make
money from the business for months or even a year or so. As
the money first comes in, you will put that money right back
into the business: purchasing marketing materials, improving
your sales literature and props, etc.
Timing.
Why is the existing
owner choosing to sell the business? The real reason and what
she tells you may be completely different. Spending time with
the current owner will usually divulge the real reason. This
reason may be the difference between success and failure. If
she’s’ retiring, and there’s still a thriving population coming
to her business, you have a greater chance for success. However
if she’s “retiring” because the population around her is aging,
and it’s taking away from her children’s’ portrait business,
you will be fighting an uphill battle.
No
matter what type of business you’re in, timing is everything.
Research your area, and discover whom you will sell to and what
they will buy.
|