Reasons for buying an existing business?

Question

Reasons for buying an existing business?

Answer 1

If you do your "due diligence" properly you will be buying a known quantity.  

Going into business is a risky proposition.  When you start a business no matter how good your idea seems to you your business could be either a flop or a fantastic success.

When you buy a going concern you know what to expect and have a solid base to build on.  Two examples Ray Kroc and McDonalds.  Howard(?)  Schultz and Starbucks.

Hope this helps

Jerry-the-bookkeeper

Answer 2

Professionally speaking, the decision to buy a business would be after evaluating the incremental benefits of strating a new one. Incremental benefit is computed in the form of the incremental Net Present Value (NPV). If NPV of buying an existing business minus NPV of starting a new business is found possitive one will decide to buy a business.

The incremental benefits would be achieved through the following ways:  

1) No initial costs (it would be pretty high in most of the cases)

2) The market presents

3) Brand name

4) Less spent on advertisements ( in some cases)

5) No headache in relation to staff recrutment etc

Answer 3

It might already have a filled a big gap in the market and have lots of loyal and regular customers.

It might already be bringing in a decent turnover for the current owner.