Thinking of Entrepreneurship: Should you buy an existing business or start from scratch?
Buying an existing business has several advantages and disadvantages compared to starting a new business:
Pros of Buying an Existing Business:
- Existing Customer Base: An existing business typically comes with a customer base, providing immediate cash flow and revenue. This is very important if you are young entrepreneurs or new immigrants who don’t have established contacts in the industry to acquire customers.
- Brand Recognition: You benefit from any existing brand awareness and reputation the business has built over time.
- Established Processes: The business may already have operational processes, supplier relationships, and systems in place, saving time and effort.
- Easier Financing: Buying an existing business may be easier to obtain financing as it has a track record and assets that can be used as collateral. This is especially important for new immigrants who are new to Canada and don’t have a credit history. According to https://futurpreneur.ca/en/faq/, typically the younger you are, the lower your credit score is, and the less likely you are to secure financing from traditional lenders. The existing business’s track record and assets can reduce the risk for the banks.
Cons of Buying an Existing Business:
- Higher Initial Investment: Purchasing an established business usually requires a higher initial investment compared to starting a new business.
- Potential Existing Issues: The business you buy may have existing problems, such as financial liabilities. Therefore, it is important to do due diligence for different aspects of the business such as legal and financial matters. We can help with financial and some general due diligence. As for legal or other subject matters, we will help you connect with the right experts.
- Post integration: Adapting to the existing company culture and working with previous employees or practices can be challenging.
We will help you evaluate your unique backgrounds, resources, and needs and decide whether to start a new business or buy an existing business. After you make the decision, we can help you conduct relevant due diligence and mitigate some of the risks through better internal control and insurance. Book your free 30-minute consultation with us https://calendly.com/ansungroup to launch your entrepreneurial journey!
