Spark Consulting

The Pros And Cons Of Buying A Business

We were talking to an entrepreneurial friend the other day and she let us know that her business is for sale. It got us thinking about how effective it can be to buy a business rather than starting one from scratch. Did you know that we bought our first business? True story. We were evaluating all of the possible business ideas we could think of and matching them up against our set of criteria. All arrows pointed to this little blanket business. To make a long story short, the creator of the company had lost interest and closed up shop. . So we offered her a (very) few bucks and had a lawyer draw up a sale agreement. It was a fast way to get up and running. Not only did we buy the finished and unfinished inventory from the company, but we also bought supplier and customer lists and wealth of information from the previous owner. Not bad for a couple of bucks, right? The odds of finding a great business as cheap as we did are probably pretty slim – but that doesn’t mean buying a business can’t be a great idea. What’s great about buying a business? You know there is a market for your product or service – that’s one part of the equation already solved for you. You inherit customer and supplier relationships. You have the benefit of cash flow from day one. You leapfrog over all the learning of getting a business off the ground and can begin way ahead of a start-up. On the downside… Buying a business can be expensive. While you’d probably spend the equivalent to start a business from scratch, you wouldn’t have to come up with the money all at once. It’s easy to get stuck in the rut of the previous owner – you can find yourself inheriting inefficiencies. Sometimes inheriting someone else’s relationships and reputation can be tricky. A lot of factors need to align in order to find the right business to buy at the right time, but it’s certainly not impossible. Some will argue that no one would ever sell a great business, but this isn’t always the case. Especially in the case of mompreneurs, there are lots of reasons why a business owner might be ready to hand over the reins that have nothing to do with the current or future potential of the business. And you never know, you might be just the person to take a business to the next level. Do you have any experience buying or selling a business? Please share any tips you have with us.

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