Disadvantages of buying an existing business pdf

On October 19, 2015

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Which of the following is not an advantage to buying an existing business?

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There are many good reasons why buying an existing business could make good business sense.

However it is not without risks and it is important to be aware of every aspect of that business and the legacy left by the previous owner.

Advantages of buying an existing business

Groundwork – the setting up of the business has already been done
Finance – it should be easier to get finance for an established business
Market place – a need for the product or service has already been established
Goodwill – you should inherit ;

an established customer base
a reliable income,
a reputation to capitalise and build on
a useful network of contacts.eg suppliers

A business and marketingplan should already be in place.
Stock and Equipment – an existing business will have sufficient stock for the short term and all the equipment required to run the business
Employees – retaining existing staff not only saves time and money on recruitment, but theyshould have experience they can share
Problems – most issues will have already been identified and resolved.

Disadvantages of buying an existing business

The reasons why the current owner is selling – what impact does this have on the business
Finance – a large amount of capital will be needed for cash flow and for professional fees for solicitors, surveyors, accountants etc.
Investment – if the business has been neglected, more investment maybe required to make the business profitable and successful
Contracts – those set up by the previous owner will need to be honoured or renegotiated
Stock and Equipment- some stock may be damaged or obsolete, old equipment may need to be replaced
Employees – staff morale maybe low if the business has been badly run or they are not happy with the news boss
External Factors – future growth may be affected by increased competition, or a decline in the industry

When buying an established business, we at Peter Robinson & Co. will provide a service with all the necessary expertise to meet your requirements.

Whether the business you are considering is large or small, with 30 years of experience in commercial property law, you can be confident that Peter Robinson & Co. will deal with your matters in a professional and efficient manner. Please call Peter Robinson & Co. today to discuss your requirements.

Call Peter Robinson & Co. now on 0161 678 7996.

By Peter Robinson 0 Comments

Finance

Diana Bocco

Last Modified Date: November 05, 2022

Diana Bocco Last Modified Date: November 05, 2022

If you want to start your own business, the number of choices available are almost infinite: starting from zero, buying a franchise, partnering. If you don't have previous business experience, however, it may make sense to consider buying an existing business, which can put you ahead of the competition by throwing you directly into the business world. Before you make the final decision, though, here are some of the pros and cons of previously established businesses and how to deal with them.

Some advantages include the following:

The main benefit of buying an existing business is the fact that all legwork has already been done for you. Getting a business off the ground is often the hardest part, so you are guaranteeing a head start by skipping the first stage. No need to file paperwork, obtain permits, and consult with lawyers.

It gives you the advantage of an established customer base. People will already know the place, so the costs of advertising will be less. You will also avoid the uncertain initial period, where attracting customers to the business can turn into a full-time job in itself.

When you buy an existing business, you may get employees who are already working there to stay and work for you. This will allow you to employ their expertise rather than having to train new people to take over the work.

Some disadvantages include the following:

You will inherit all problems that run with the business. If the previous owner had trouble attracting new customers, paying the lease, or running new campaigns, you will have to deal with everything to set things right before you can even start to think about moving forward. If the business has a history of disappointing customers, you may also have a hard time convincing people that things will change under your direction.

The purchase will probably mean a large initial investment, usually much higher than it will require to start a business from scratch. The investment will also have to be in a lump sum, and you won't have the chance to go through the process in phases.

Buying an existing business is exactly what it sounds like. The buyer typically takes over full ownership of the business. The largest advantage is having an existing blueprint that can include important factors like an established customer base, defined operating expenses, and fully trained employees.

What are the advantages and disadvantages of existing business?

Advantages and Disadvantages of Buying an Existing business.

Groundwork – the setting up of the business has already been done..

Finance – it should be easier to get finance for an established business..

Market place – a need for the product or service has already been established..

Goodwill – you should inherit ;.

Which of the following is not an advantage to buying an existing business?

The answer is b. Capital is not required for a new business since it already exists. Using additional capital to purchase the business limits one's total capital, which is considered a disadvantage.