Why buying an existing business beats starting from scratch

Almost every week, someone asks me, “So what do you do?” When I tell them, “I sell businesses, I am a business broker,” most responses are something like, “What’s that? You can sell a business? Why would anyone sell their business?”

My most common answer is, “Well, lately a lot of business owners are retiring and their family is busy doing other things. They have a very good established business, but now is the time to let someone else take over and run it.”

Other reasons owners sell their enterprise, to name a few, is because of health, divorce, partnership split, moving out of the area, other opportunities, and sometimes the owner is not cut out to run a business and someone else can take that business to the next levels.

Very seldom someone asks, “Why would anyone want someone else’s business?” Well, the main reason is that it is a lot less risky to buy an established business with a good track record than to start your own from scratch. You already have trained employees, regular loyal customers, proven advertising methods, and vendors that have already proven to be reliable with good prices. So as you can see, there is a huge advantage to buying an existing, well-run business.

Sometimes I sell a closed business, just its assets and the location. For example, you may buy a closed restaurant and change the name and concept and be very successful.

Sometimes an existing business owner buys a similar business to expand overnight but most of the time the buyer is someone that never owned a business before, but has always dreamed about owning their own business.

Many times, I am asked “What kind of businesses do you sell?” Doing this for so long, I tell them, I have sold all kinds: retail, service, manufacturing , wholesale, online, doctors practices, home based, and many others that we will talk about in future articles. In the weeks to come we will also discuss how to value a business and all the criterias that affect the value besides income. We will look at the lease terms and how it affects the business. How quality of employees and length of their employment is very important to the buyer. Ability to secure financing and/or seller financing. Due diligence by buyer and what to look for in the books and records.

I am sure you also want to know what type of entrepreneur you are and how to develop a business plan. Stay tuned every week, as we will discuss these and a lot more. Meanwhile, stay happy and healthy.

Siavosh “Sam” Ardalan is the founder of Red Hot Properties Business Sales and is a certified business broker, member of the National Association of Realtors, California Association of Business Brokers, and International Business Brokers Association. He can be reached at siavosh.ardalan@yahoo.com