Benchmark International

Why You Should Buy an Existing Business

It's the unfortunate truth. More than half of all new businesses fail within the first few years of operation, and 90% of the latest companies leave within the first four to five years. Those are some scary odds. This is why acquiring an existing company can be much safer and more intelligent than building a new business.

When you purchase a company that is already established, you are also acquiring all of its existing advantages, including its customer and client bases, infrastructure already in place, ongoing connections with suppliers, and a brand that many people already recognize. Of course, some of these areas may need to be improved, which could be why the owner is open to selling. So, when you think about purchasing a particular business, you need to look at its shortcomings and consider how well you may be equipped to turn things around and several other factors that can ultimately affect the business's success once it is in your hands.

Steps for Finding the Right Business to Buy

First, consider all the ways you can contribute value to the business. Your background, abilities, and specializations might strengthen the company's shortcomings and enhance its strengths. You will want to look for the type of business that best suits you and what you can offer. It will also be a strong selling point when convincing the owner that you are the best buyer to continue their legacy and accomplish their goals.

You will also want to ensure you are personally invested in the business's success. A business venture you are enthusiastic about has a higher chance of success than a company that deals with something you are not very interested in. If you lack interest in making or selling air conditioners, you shouldn't buy an air conditioner company. Look for a company you can get behind and invest your passion in. This new endeavor will likely demand a significant time commitment on your part, so you should feel excited and inspired by the opportunities that lie ahead.

It's also possible that you will stumble upon a company that piques your interest but has yet to be for sale. Never hesitate to inquire about the owner's willingness to sell. Provide your contact details if something changes their mind, even if they decline.

One thing you will need to do before trying to buy a business is figure out how much you can afford to invest. Ask yourself the appropriate questions, such as how much money you have available, whether you need financing, and how much debt you can handle. Additionally, you can save time by eliminating companies outside your budget when you have a realistic sense of what you are willing or able to spend on an acquisition.

Another way to find the right business to acquire is to talk to people. Ask your business associates, friends, and other contacts if they know of any companies on the market. This approach can make Finding a good lead easier, particularly if you already have a relationship with the owner. Taking this path could also put you in contact with people who are not the best fit or are not serious about selling, so buyer beware. Just because they say they want to sell doesn't mean they do, and it doesn't mean that it's the right fit for you.

You can also explore your options online. Sometimes, small businesses for sale are listed on several online marketplaces. This is a relatively simple method of gaining access to essential data, including location, asking price, profitability, and inventory, and these listings are often worldwide. Just be advised that overinflated company valuations might be listed on these sites. Furthermore, some of these sites can be inundated with too many listings, saving you precious time. Additionally, you can end up having unproductive conversations with owners who are not genuinely committed to selling.

Remember that you are assuming a great deal of responsibility when you buy a business, so you should ensure that your lifestyle can accommodate everything it will require of you. Consider how taking over a firm will impact your family, time, and existing commitments. You should decide to what extent you are willing to devote your time, whether you have to move, and if there is any debt that will cause you to lose sleep. Only take on what you can handle for the benefit of the company, your family, and your sanity.

A smart move for buyers and sellers is to work with mergers and acquisitions experts. In most cases, you need help finding out about the highest quality businesses for sale through word of mouth or websites. Also, you will not have access to exclusive information about them. M&A experts are better equipped with resources and knowledge of how to link reputable companies with the right buyers. By choosing this path, you can also be sure that you are speaking with only legitimate sellers instead of those who are merely speculating about selling. All these advantages add up to a more prosperous and profitable encounter.

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Lawrie@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com 

ABOUT BENCHMARK INTERNATIONAL:

Benchmark International is a global M&A firm that provides business owners with creative, value-maximizing solutions for growing and exiting their businesses. Benchmark International has handled over $11 billion in transaction value across various industries from offices across the world. With decades of M&A experience, Benchmark International’s transaction teams have assisted business owners with achieving their objectives and ensuring the continued growth of their businesses. The firm has also been named the Investment Banking Firm of the Year by The M&A Advisor and the Global M&A Network as well as the #1 Sell-side Exclusive M&A Advisor in the World by Pitchbook’s Global League Tables.

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