Buying a Business for Sale: Pros and Cons to Make a Smart Choice

If you want to start your own business, you can choose to start from the ground up or buy an existing business for sale. Buying a business that is already in operation has advantages and disadvantages. In order to make a smart decision, you will need to understand these pros and cons first.

Benefits of an Buying an Existing Business

Buying an existing business, in most cases, is often less risky than having to start from scratch. By purchasing a business that already exists, you will inherit an operation that is already generating cash and even profits. At the same time, you also have a customer base that is already established, employees who are familiar with the business aspects as well as business reputation. Above all, you won’t need to reinvent the wheel- putting in place new systems, policies and procedures- because the former owner has put a successful formula for running that business in place. Some of the added benefits of buying an existing business are:

Proven track record

Existing and thriving businesses tend to have proven track records of generating profits, which is likely to continue when you buy it. By incorporating your new ideas, a renewed energy and expertise it is possible to make your business be even more profitable.

  • Established customer base

An existing business for sale tends to have an established customer base, which can ensure immediate cash flow. Upon acquiring the business, you do not have to go through the difficult start-up period of identifying and developing a customer base to meet your requirements. You can use these existing clients as the building blocks for your business to grow in the future.

  • Continuous operations

If you buy a business that is already thriving, it is likely to continue operating profitably for several years to come. In fact, the success rate of a person buying an existing business is higher compared to that enjoyed by people starting from scratch. It is primarily because an existing successful business has proven already its mettle. All you need is to continue following the basic approach of business and you will no doubt operate successfully too.

  • Fewer hurdles

When starting a business from scratch, there are many challenges that will be encountered along the way. This, however, is not the case when it comes to purchasing an already existing and successful business. Simply put, majority of problems that many ventures tend to undergo have not only occurred but have also been resolved.
The drawbacks associated with buying an existing business 

The attraction of buying an existing business, at times comes with its own set of challenges. The most common of these is that it is very expensive since you are buying a business that is already doing well. It means that you need to have enough capital just to acquire the business. Without a huge capital there is nothing you will be able to achieve later.  Some of the other drawbacks associated with buying an existing business are:

  1. The cost of buying the business, coupled with accounting and legal fees, can easily exceed the cost that you would need to put up a new business.
  2. While there is the chance of inheriting trained staff, it can be a huge disadvantage if you inherit disgruntled workers as well.
  3. There will always be a concern about some employees harbouring resentment towards a new owner coming in and then changing the system.
  4. There is no guarantee that the existing customer base will be in great shape or that clients will trust and work with the new business owner. If you buy a business that used to be on a roll but have recently experienced a slump in its reputation, you will have to do a lot of calculator and graph with pencil work to not only retain the reputation but also get new clients on board.
  5. You must have the financial resources that the business requires to run if the profit is not as much as you expected. It is important to consider every expense and this even includes your own pay-check. Also, scrutinize the annual revenues. Do they increase every year or are they flat or declining? You also need to consider if you will be able to wait the business out should an ownership change lead to a decline in revenue.

How Do You Identify the Right Business for Sale?

First and foremost, you need to establish if you are truly ready and motivated enough to buy and run an existing business. Before you make a final decision it is always good to ask yourself the following questions:

Are you aware of the type of business that you are about to buy?
  • Do you have the technical qualification and enough experience needed to run that business?
  • Are you prepared to commit a lot of time that the business may require?
  • Do you have temperament to enable you handle the fickle customers, difficult employees and demanding creditors?
  • Will you be able to deal with the business’ bookkeeping requirements?
  • Do you possess the attention to detail some businesses require?
  • Will you be able to handle uncertainty and still maintain your cool?
  • Are you personable, i.e. be able to deal with both employees and customers successfully?

Irrespective of the circumstance, it is essential to take into account the various considerations before reaching the decision to buy an advertised business for sale or start one from scratch. After analysing the benefits and drawbacks and finding the answers to the questions above, you will be in a much better position to make a smart move.

Find the ideal business that meets your need, here.

Small Business Debt Collection Brisbane Process 101

What is the advantage of obtaining a debt collection agency?

You need a healthy cash flow to run a small or medium business. So, when your past due customer receivables start piling up, it’s not something you could lightly brush aside. These overdue invoices can seriously compromise your access to working capital and can ultimately put your business operations in peril.

When it comes to the debt recovery process, small firms are usually at a disadvantage as compared to bigger corporate counterparts, as they have easy access to resources and can deploy trained, dedicated debt collection Brisbane departments. With smaller businesses, typically this role either falls on some “lucky” worker who’s already juggling multiple roles and has limited debt collection training, or on designated bookkeeper.

One of the most vital factors that’ll determine the success of your debt collection efforts is the level of preparedness and knowledge with which you approach those efforts in the first place. Here we’ll discuss a few valuable tips on the small business debt collection process that will make their task easy.

When you should consider a debt seriously overdue?

After 90 days, a customer account can take on a delinquent status. You should keep in mind that you have limited chances of recovering this debt. With the passage of time, the likelihood of cashing further plummets to around 46 per cent, and to only 19 per cent a year later!

“Good Debt Collection Tools and Policies Means Successful Debt Collection”

  • Record your customer details clearly and accurately.
  • Develop clear and thorough credit terms and conditions.
  • Incorporate assertive debt collection tactics.
  • Send out a series of debt collection letters starting with a mere warning and finally demanding a payment before you send the matter on to a third party.
  • Request a face-to-face meeting.
  • Try a series of debt collection phone calls. Freeze or close the customer’s account.
  • Conduct an annual evaluation and review of the debt collection process.

Your options:

Go to small claims court for recovering your unpaid customer debt

Some companies also use the threat of going to court for debt recovery just as a scare tactic so that their debtors pay out. Although there is an increase in the number of claims being filed in Australia, claimants are not able to collect their debt even after winning cases. This is mainly because the claimant is solely responsible for collecting the debt afterwards. Usually it has been seen that small claims courts are a hassle that should be avoided. Instead, the best way to go is to hire a debt collection Brisbane agency.

Using a debt collection Brisbane agency for your past due accounts

The use of a debt collection Brisbane agency for recovering your overdue accounts is definitely the most popular and trusted option among small and medium business owners, and with good reason. The biggest advantage of using a debt collection service is that their team takes over the entire burden of sending proper collection letters, making phone calls, and then negotiating payment. Businesses are thus free to focus their energy where it matters the most – on running their business!

All in all, by following all of the aforementioned strategies and tips on effective overdue debt collection, you can greatly increase their chances of recovering all or part of your past due receivables.