Do you enjoy playing the odds? Do you think a 1 in 10 chance of success is a reasonable position? To a large extent, it depends upon your risk profile – some people love to gamble. According to Stats Canada, the odds of successfully launching a startup business are approximately 10%. However, for many entrepreneurs, the decision to become a business owner often boils down to two options: should they start a business from scratch or buy an established and profitable one? While starting a new venture offers the excitement of starting something brand new and unproven, purchasing an established and profitable business provides several clear advantages - offering a more secure and proven path to success. Below, we’ll explore why buying a proven business might be the smart choice for you:
Top 7 Benefits of Purchasing an Established Business
- Proven Track Record An established business comes with a history of performance, providing you with concrete data to assess its profitability and potential for future growth. Unlike startups, where success is uncertain and untested, a proven business has already demonstrated that its operations work, reducing the risks associated with starting from scratch.
- Existing Customer Base When you buy a business, you acquire an existing, loyal customer base that can lead to immediate sales and steady cash flow. Building a customer base from the ground up can be one of the most time-consuming and expensive aspects of starting a business, but purchasing an established company allows you to skip this hurdle, ensuring revenue starts flowing right away.
- Established Brand Recognition An established business often comes with strong brand recognition and a trusted reputation in the market. This familiarity can quickly lead to customer loyalty, allowing you to leverage existing relationships with suppliers and customers. With a recognizable brand, you gain a competitive edge that can be difficult and expensive to replicate with a new business.
- Financing Advantages Securing financing is typically easier for an established business than for a startup. Lenders are more likely to trust a business with a proven revenue history, making it easier to secure loans, lines of credit, or favorable terms for expansion. The stability of a business with consistent performance provides banks and investors with confidence, unlike the uncertainty of a new venture.
- Operational Efficiencies Established businesses come with systems and processes that have been honed over time. From supply chain management to marketing strategies, operations are generally more efficient. These processes allow for smoother daily operations and a reduced learning curve, meaning you're less likely to make costly mistakes often seen with new businesses.
- Trained Human Resources One of the greatest advantages of purchasing an established business is inheriting a team of trained employees who are already familiar with the company’s operations and culture. In today’s competitive job market, hiring and retaining skilled workers is increasingly difficult. When you buy a business with an experienced workforce, you benefit from their knowledge and expertise from day one, minimizing disruptions and enhancing productivity.
- Faster Return on Investment Since an established business is already generating revenue, you’re likely to see a faster return on your investment compared to starting from scratch. New businesses often face significant startup costs and may take months or even years to become profitable. With an existing business, you can start seeing returns immediately, making it a more attractive option for those looking for a quicker path to profitability.
Conclusion
Purchasing an established and profitable business can provide significant advantages over starting from the ground up.
Whether you're seeking a potentially much quicker return on investment, looking for a proven operating model, or wanting to minimize your risk, purchasing a proven business is a smart decision that positions you for long-term success….and you may also sleep better at night.