Buying a Business or Franchise

Buying a Business or Franchise

Going into business is a major undertaking. Instead of starting from scratch, per say, there is the option to purchase an existing business or open a franchise. In some cases this is an easier approach to business ownership due to the fact that a lot of the hard work is already done for you. Granted you’ll have to do your homework; research the business and industry, determine the best location, come up with necessary initial investment, as well as meet requirements of the franchiser or business seller. It’s also imperative for the aspiring business owner to appraise their own experience, skills and background in order to decide which business is the best fit. This should be done regardless of if someone is starting their own business, buying an existing one, or considering a franchise. See below for details pertaining to buying an existing business and franchise.

Buying an Existing Business

There are several benefits to buying an existing business. It will already have a track record of income and expenses, so the business’s financial standing and worth can be evaluated. It is the potential buyer’s due diligence to obtain and examine the seller's financial statement and records prior to making a decision to purchase. Depending on the type of company, operating cost may be lower than that of a new business. Although the buyer will need capital to purchase, some sort of financing is usually involved as opposed to having to pay cash. The amount of funds required for a down payment will be based on the type and size of business. However depending on the business, in addition to a down payment, sufficient operating capital may also be necessary. A business that’s for sale will also already have trained employees and established operating process. Additionally, the business may already be a market leader in the trade area. As the new owner, there’s the option to make significant changes to the business or simply oversee an existing operation process.

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