Business – To Buy Or Not To Buy?

Written by on September 5, 2008
Categories: Business Funding, Business Growth, Business Startup, Success Thinking

Posted by: Paul Stanford

 

To Buy Or Not To Buy?..

When starting a new business, many people think of starting from scratch. There could be good reasons for this (for example it could be a completely new idea or product that hasn’t existed before) but more likely the new entrepreneur has not considered any other option than setting up from nothing. One alternative is, of course, to buy an existing company.

Both have their advantages and disadvantages. If you are going to start from scratch then you will be starting from a base of zero. You won’t have any existing client base, any suppliers, any contracts, any premises, any staff or any income from day one. However you also won’t have any legacy or be held back with any preconceived ideas or outdated policies and procedures or any bad debt. Buying an existing business will give you access to an existing client base, income straight away, premises, employees, brand name, contracts and suppliers. It could also bring you bad debt, a poor brand image and hold you back with legacy processes, staff and supplier contracts.

So the message is do your homework and do your planning. If buying an existing business – ask the question “why are you selling it” and if you are not entirely happy with the answer then be very cautious. There are many genuine reasons for someone wanting to sell their business – they could want to retire, there could have been a death, they could be moving away or it could always have been part of a well defined plan. Equally it could be because the business is on the verge of bankruptcy. But go in with your eyes wide open, ask the right questions, draw up the right contract and you could bag yourself a bargain. Buying an existing business could save you £1000s in start up costs and propel you several years ahead of where you would be if you started from scratch.

Equally it’s a good idea to consider buying an existing business if you already run a successful business and want to expand. Similar rules apply of course!

 

Paul Stanford is a Director of 4Momentum http://www.4momentum.co.uk. 4Momentum provides business advisory services to small businesses, charities and social enterprises primarily in Sussex. Services include advice on starting a business, growing and transforming a business and selling a business. Clients typically contract 4Momentum for short periods of an hour to long term consultancy over many months for advice on subjects such as mentoring, business planning, sales and marketing advice, bidding for contracts, raising finance and general business advice. Paul is approved by the UK Government to deliver business advice on their behalf through Business Link and is a member of the Institute of Business Consultants. Visit his blog at http://www.paulstanford.co.uk/blog

Copyright 2008 Paul Stanford

 

 

 

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