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Should I Buy an Existing Business?

Should I Buy an Existing Business?

With so many options available to you, the question will become which type of the business? Between franchises, existing businesses, start-ups, and home- based businesses, it can become quite daunting.

When looking at all the options you have to decide what will work best for you; however, your chances of success are higher when you buy an existing business or franchise for a lot of different reasons. With any new business you have two challenges: developing the product or service and then driving traffic or sales.

An existing business or franchise will, should have a history which will enable you to mitigate your risk and make a more informed decision.Even if the business was not profitable in the past, your strengths may be blend in perfectly to turning it into a viable venture. Furthermore, you have the ability to verify what the company did in the past that resulted in the current status of the operation.

Ease of Investigation

In order to buy the right business or franchise, you will be required to do a thorough investigation of its past activities, financials, operations, current status, competition, the industry and its future potential.Clearly, this information is substantially more accurate and easier to obtain when buying an existing business or franchise, as you will have the data available from which to get the details as opposed to potential forecasts.


Also there is the benefit of purchasing a business that has an infrastructure, including customers, suppliers, employees, equipment and systems. This will allow you to focus on building the business as opposed to a start-up or new franchise where everything begins at point zero.

Purchase Price Differences

Buying an existing business or franchise doesn’t mean that it costs more.

In fact, a lot of the time it’s less expensive than building a new franchised location or launching a new business.Even in those cases where it may require paying a premium, at least you know what you are getting if you do your due diligence correctly.With a new franchise, a good Franchisor will do demographic studies on population, drive-by traffic, potential customer base and a whole series of studies that will indicate that “theoretically” the business should do well. However, the only thing they cannot guarantee is whether or not you will be successful. Also, new locations can take a year or more to build. You can avoid all of this when buying a resale.

Flexibility in Negotiating

You will have far more flexibility when negotiating the purchase of an existing business or franchise versus any other options available; it’s not even close! Everything from the purchase price to financing is open to negotiation. Doesn’t it make more sense to put yourself into an environment where you have the greatest number of options available?