Business Tips

Advantages and Disadvantages of Buying a Business

Advantages

 Buying an existing business offers a sense of security because you have a good idea of what you’re getting for your money. 

Existing customers and goodwill

An established business will generally come with existing customers, clients, suppliers and staff.  This eliminates much of the effort and expense needed to generate goodwill, branding, advertising and hiring staff. 

Expenses and finance

The business is already operational and stock is already on hand, so your initial expenses would be minimal and you can quickly generate a cashflow.  If you need to obtain finance, it may be easier because the business has a proven track record. 

Training and assistance

First-hand experience is valuable and the previous owner and employees remaining with the business are best placed to give you the training and assistance you need. 

Disadvantages

An existing business does not come with a guarantee of future success!

Goodwill may not last

There’s a risk that customers and clients may leave when the business changes hands.  Staff may wish to leave too and you may have to pay their entitlements, such as long service leave.  The departure of the owner may have a negative effect on the business, so you can’t necessarily guarantee the profits.

Reputation

The business may have a bad reputation or have made a poor impression in the past – this might prove difficult for you to turn around.

Premises and equipment

The premises may be inadequate and the equipment or stock may be out dated or in need of replacing or repair.

Action Plan

Thoroughly research the business!

For expert advice on buying a business, make an appointment to talk with your accountant, solicitor or business adviser.

Contact Vision Financial 07 4951 7900 or email enquires@visionfg.com.au to make an appointment