Buying an Established Business

The majority of entrepreneurs start their own businesses.  However, some choose to buy an existing business.  Why?  Some don’t believe they have a creative idea for a new product or service.  Some say it’s a matter of saving time—they don’t want to wait for a brand new business to become established before it operates at a profit.  Whatever the reason, there are some important things to consider if you are thinking about buying an existing business.

You will inherit an infrastructure, customer/vendor base, resources and employees.  This legacy can be a pro or a con, or, more likely, a combination—while having a customer list already buying from you is great, but having employees who want to “do it the way we’ve always done it” can be an obstacle to progress.  While buying a business usually requires more capital than starting one, there may be owner- financing  available as well as other options (like RBSU, a program allowing an entrepreneur to rollover an IRA with no penalties to finance the purchase of a going concern). 

Author: Sarah E. Needleman

Source: The Wall Street Journal, July 31, 2011

Last year, Mark Shelstad set out to become his own boss after concluding that his portfolio-manager job had become unstable. But instead of trying to build a company from the ground up, the Chicago-area resident began searching for an existing one he could buy.

“I didn’t have a creative idea worthy of starting a business from scratch,” says Mr. Shelstad, who is in his mid-50s. Also, “I wanted to get up and running quickly due to my age.”

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