Buying entrepreneurship through the purchase of an ongoing business is a quick way to enter the market, saving time and complex first steps, but it also involves risks lets look at the advantages and disadvantages.
Advantages of entrepreneurship a business in motion
- Saving. It saves time and money that leads to the generation of the business idea, the market research, the structuring of the company, the opening of the premises, workshop or office, and the adjustment to the market that occurs during the first months in operation. .
- Focus. The entrepreneur can focus immediately on the operation of the business instead of choosing the name , decorating and equipping the place, selecting suppliers and other aspects of the start-up of a business.
- Background. You get not only the business in progress, but your career, background and positioning, which simplifies from obtaining new customers to presentation for credits or subsidies (of course, if these aspects are positive!).
- Tests. The performance in the market of the product or service can be evaluated with more certainty, instead of being based on projections or assumptions.
- Income. If the business is fully operational, it starts billing from the first day, so there is revenue from the beginning, and there may even be predictable profits.
- Opportunities If you buy a business that is doing badly for management reasons, lack of funds or commercial issues that can be reversed, it is possible to obtain an opportunity price. Of course, we must take into account the risk involved and have a solid business plan to make it profitable.
Disadvantages of undertaking buying a business in progress
- Responsibility. Buying a going concern involves taking over personnel, guarantees, debts and other commitments that are not always easy to identify.
- Valuation. It is not so simple to put a price on a small business , especially to value its intangible assets such as brand and positioning. The cost of doing it professionally may be too high, so in many cases the value ends up being the result of the negotiation process between buyer and seller.
- Past. The business already has a name, a defined profile and a way of doing things that hardly matches everything you want. And it is not possible to erase the past!
- Investment. The initial investment is usually higher than starting from zero, since the advantages are being paid (time savings, proven market, income, etc.). Thus, in the early stages, work is being done to repay the goodwill or investment value invested.
- Negotiation. Many sellers overestimate the value of their ongoing business, as they value it for their investments or expectations and not for their ability to generate income. Thus, the negotiation can be exhausting.
- Partial sale Some sellers offer only part of their business, leaving the new owner with some key issues that can make the business fail, such as the use of the brand, the renewal of the rent, the qualification or contracts with important clients.