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Buying an Existing Business vs Starting a New One

If you are considering running your own business, one of the first questions that might pop into your mind is: should I start a new one or buy an established business? In this article, we’ll take a closer look at the age-old dilemma of buying an existing business vs starting a new one from scratch.

Here are 5 Reasons Buying a Business Might Better Than Starting a New One


1.  An Established Concept

The benefits of buying an established business are no doubt huge. At the top of the list is that an existing business will have an established concept. Starting a business from scratch means taking a big risk in the form of a new idea. Will it really work? If the business fails, why did it fail? Both of these stressful questions need not be asked when you buy a business. An established business, especially one that has been around for years, has already shown that the concept and all the variables that go into it do, in fact, work.

2.  Proven Cash Flow

Another massive benefit of buying an existing business is that an existing business has proven cash flow. You can look at the books and, in the process, determine just how much money is flowing in and out.  You simply won’t be sure how much a new business will generate. This can make it tricky when you’re trying to figure out how to pay not only your business expenses but your personal ones as well.

3.  The Unproven Element

No matter how good your idea and/or your location, even in sunny San Diego, a new business is still unproven. Despite the best of efforts, there may be an unforeseen variable that you or your consultants might have missed. However, when you opt to buy a San Diego business that’s proven, this variable does not apply to you.

4.  An Established Staff

A business is often only as good as the people that populate and support it. Starting up your own business means that you have to go out and find all of your own employees. This process is much more than sifting through resumes. A resume only reveals so much. A resume doesn’t reveal if a candidate will be a good fit for the business, and it certainly doesn’t factor in chemistry. As any good coach of any team sport knows, chemistry is one of the greatest factors in winning a championship.

5.  Established Relationships

A proven business also comes with an array of business relationships. Working out problems with your supply chain in the early days of your business can mean the end of that business. Many business owners have seen their businesses undone by problems with their supply chains. An existing business can point the way to reliable and consistent suppliers.  When buying an existing business, you are acquiring a proven performer. You know that the business had what it takes to provide cash flow over a given period of time. You will also have customers who know who you are, where you are and how to buy from you. Buying an existing business also means gaining access to reliable suppliers and enjoying all the benefits of an established brand name and location.

When faced with the choice of buying an established business vs starting a new one, know that buying a business reduces many variables and risk factors over getting an unproven new business off the ground. Contact us, your local San Diego business brokers, to help you find a proven San Diego business for sale that’s right for you!

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