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.”