Buying an existing business can sometimes cost more money, but you must not be quick to consider this a disadvantage. After all, you will be buying the goodwill of the business.
For the sake of comparison, let’s take a look at the different disadvantages of buying an existing business.
First, it takes a lot of research to determine whether buying a resale, regardless of how profitable the offering, will be advantageous to your specific circumstance or not. You first need to find out why the franchisee is leaving and selling the business. The answer to this question may reveal the truth behind the sale and expose any existing problems the business has.
Second, the facilities and equipment of the existing business may be old and out of date. In which case, they would need upgrading or replacing – incurring more costs.
Third, employees might not stay after the business has been sold. This is another important question you must get an answer to if you are counting on having trained staff in place.
Fourth, the future performance of the business can be affected by many different factors. You would need to look into shifting market trends or neighbourhood changes. You would also need to do some research into the business’ competitors and how they may impact the future of the business you are acquiring.
Finally, you must gain a better understanding of where the business currently stands. If it has been on a decline, you might have a difficult time turning it around, especially if the previous owner allowed it to deteriorate. Winning back old customers can sometimes be more difficult than acquiring new ones. If the business you are looking to buy has developed a negative reputation in the market, you will have an even harder time picking the pieces back up.
Image from agbeat.com
