General
The Compelling Argument For Buying A Business Instead Of Starting One in South Florida
If you are thinking of becoming an entrepreneur, you could consider starting a business from scratch. But this approach carries a high degree of risk. According to the U.S. Small Business Administration, about half of all new businesses close down within five years of being established. By Year 10, only one-third survive.
You can increase your chances of success by buying an existing business instead of setting one up yourself. This approach has several benefits:
⇨ It’s easier to raise the money– a lender would prefer to finance a company that has been profitable for several years and has a proven business model. You will be able to back your loan application with financial statements and cash flow projections. Getting a loan for a new venture is usually far more difficult.
⇨ You will make money from the first day – the company that you purchase will have an existing set of customers. All that you have to do is to ensure that you continue to provide the same level of service as the previous owner.
⇨ You are buying an established brand– this is probably the most significant advantage of acquiring an existing business. The company will have a reputation that has been earned over the years. Creating your brand and popularizing it would require a considerable amount of work and expense.
⇨ There is no need to worry about finding employees to help you run the business– one of the problems that new business owners have to contend with is recruiting trained and competent workers. But if you buy a business, you won’t face this issue. The company’s employees will continue to work as before, and this will give you the time to focus on improvements and expansion.
The bottom line
If you are trying to decide between setting up your own company and buying an existing business, there is one factor that could seem to be in favor of the former. Starting a business could appear to cost less.
However, you must consider the fact that an established company will give you a profit right away. With a startup, you could have to wait for months, or even years, to break even.
Sunbelt Business Brokers of West Palm Beach can help you prepare to sell your business in South Florida, guiding you from listing to closing. If you’re considering selling your business, get in touch with us today for a confidential, no obligation conversation.
Ryan Cave is President of Sunbelt Business Brokers of South Florida, a business brokerage firm specializing in the purchase and sale of small to midsize businesses. Sunbelt Business Brokers of South Florida has been involved in the valuation and sale of hundreds of privately held businesses for nearly 20 years.
