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Reasons people buy existing companies

On behalf of Kadish & Associates Law Group posted in Business Formation & Transactions on Friday, March 16, 2018.

You have always wanted to be a business owner, but you always assumed that meant you had to start your own company from scratch. While that’s certainly one option, keep in mind that you can also acquire an existing company.

Naturally, you may need more capital up front to go this route. You have to buy the established business at its current value, rather than starting small and building up over time. However, there are some significant reasons why people choose this path.

For one thing, the company may already be profitable. It sometimes takes new business owners years to finally turn a profit. Cutting that out gives you a chance to start making money right away.

It may also provide you with more stability. You want to make changes, but you already know that the company works. Maybe it’s been in business for a decade or more. If you’re worried about a start-up burning out in the first year, this mitigates your risk.

Plus, that company has branding. It has name recognition. It has a customer base. These are all things that start-ups have to fight for. It doesn’t matter if you offer a terrific product or service if no one can find you. Buying a company means you already have some exposure and you just have to build on it.

Finally, the company comes with assets like inventory, employees, machines, vehicles and much more. You don’t have to spend time building everything up and hiring workers. You can just hit the ground running and get to work.

If you do decide to buy a business, make sure you’re well aware of all of the legal steps you need to take.

Source: Entrepreneur, “How to Buy a Business,” accessed March 16, 2018

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