So you want to start a business. Let’s say you’re close to achieving one of your biggest dreams: to become your own boss. But many prospective entrepreneurs fail to appreciate the work required to start one. You have to conduct market research, write a business plan, look for funding, plan the structure, think of a name, apply for licenses and permits, and the business hasn’t even opened yet. Not to mention that 1 in 5 new businesses fail in their first year, and only a third survive their first decade.
But what if you could buy an existing business instead? The market is experiencing a glut of listings of companies for sale, and most of them never will: Up to 90% of listings fail to sell. What does this mean for you? Anyone looking to buy a business in Utah faces a buyer’s market. You can choose from a wealth of listings, and you have all the leverage to negotiate a favorable buyout.
If you’re buying a business, that doesn’t mean you are buying damaged goods. Brokers only list businesses that have a good chance of succeeding under new management. Owners put their companies up for sale for many reasons. It could be a lack of plan, boredom, fatigue, divorce, even retirement. Here are a few reasons why you should buy a business in Utah.
1. Easier financing
Banks and financial institutions are more amenable to granting a loan for buying an existing business than taking its chances on a startup. From their point of view, an established company with a proven income stream is less risky than a new business with zero clientele and profits.
Some businesses also have an established line of credit. New companies have to apply for one, and it will require proof of revenue generation or collateral. By buying a company, you have immediate access to funding should you need it.
2. Immediate revenue
Many new businesses don’t generate income right away. Many go through a phase of deficit spending while they try to establish themselves. Some of the recurring expenses include office rent, equipment, materials for production, professional fees, the list goes on. An existing business has a revenue stream from day one, and you can focus on growth rather than survival.
3. Access to suppliers and customers
Startups have to build a customer base and a network of industry contacts, and it can take a long time before it can become sustainable. Existing businesses already have an existing network of suppliers, contacts, and loyal clients at the ready. With that foundation, you can focus on strengthening existing relationships instead of building new ones.
4. Structure in place
With an existing business, you already have physical locations in place. You don’t have to worry about looking for office space, warehouse, tenants, among others. You can improve the structure in place than building a new one from scratch.
You also won’t have to worry about human resources. When buying a business, you get to absorb the existing workforce. Instead of training new employees, you can just work with the team already there.
Many people who buy a business do it for one simple reason: it’s easier. Why go through the trouble of starting a business when you can just take over an existing one?