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Is buying a ready-made business cheaper than starting your own?

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Deciding to become your own boss is a significant commitment, and you need to make sure you consider all the elements involved. One of the first and most consequential decisions to make is whether you should buy an existing business or start your own.

Some of the components to factor in include the amount of capital you would need, if you have any prior business experience or specific skills, whether you want to be an employer, and your goals for the future of your business.

The financial aspect of buying or starting a business is one of the major issues, however, so would buying a business ready-made be cheaper than starting your own? Although there are pros and cons for each, buying a ready-made business offers significant benefits overall.

Here are some of the factors to consider.

Starting your own business

Pros

  • Starting your own business allows you to control the start-up costs and grow in a sustainable way as finances allow
  • If you’re skilled in marketing and branding, or are looking for a creative challenge, developing a business from start-up may be more appealing

Cons

  • You’ll need some experience in the industry you’re entering when you start your own business, as well as knowledge of business finances, so you can set up the correct procedures – regular cash flow forecasts, for example, or choosing a payroll system
  • The costs of recruiting new staff are considerable – finding suitable employees, recruiting and retaining them, and providing staff training - all add up
  • You may not be able to secure the funding you need as a start-up - although you’ll have a business plan, there will be no history of previous sales or profit levels as there are with an established business

Buying a ready-made business

Pros

  • The business’ infrastructure, including computer systems, software, and processes, is already established in a ready-made business – a crucial aspect that enables you to focus on growth and development as the new business owner
  • When buying a ready-made business you can see how profitable it has been, and view the sales history over its lifetime
  • Banks and other financiers are more likely to lend to an established business that’s financially stable, and can provide the supporting sales and profit figures that lowers their perceived risk

Cons

  • You’ll need more capital to buy a ready-made business, although this can represent a safer investment in the long-term
  • You may have concerns over why established businesses are up for sale – this can be overcome by using professional business brokers to advise and help you find the right business

It’s important not to underestimate the cost of starting a new business. Overall, it’s likely to be cheaper to buy a ready-made business rather than starting your own - this route also offers other benefits that can bring a better and faster return on your investment.

When you factor in the costs of start-up marketing and branding, recruiting qualified staff, and setting up equipment and machinery, buying a business that’s already established and has a reliable customer base is likely to be cheaper.

You also take over the business from an elevated position in the market, with supplier contracts, employees, goodwill, and a recognised name in the community, already in place. If you would like further guidance on buying a ready-made business versus starting a business of your own, Selling My Business can help.

Our director-led team has extensive experience across all industries, and can provide the sound advice you need. Please get in touch to arrange a free, same-day consultation – we operate a broad network of offices around the UK.


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