5 Benefits of Buying an Existing Business
Financing to purchase an existing business might be easier than borrowing to start from scratch.
I love listening to podcasts. My favorites are How I Built This and Masters of Scale where the hosts discuss how well-known companies got their funding and scaled their businesses. As someone working in the small business community, I find these origin stories fascinating. I’ve also observed that more and more entrepreneurs like the idea of building a business more than running a business. As a result, they’re often looking for an exit strategy where they can sell their budding start-ups to eager buyers.
As a potential business owner, there are a lot of benefits to buying an existing business.
- You are taking over an operation that’s already generating cash flow and profits.
- You have an established customer base and reputation in the industry.
- You have employees who are familiar with all aspects of the business.
- You already have a successful formula for running the business including procedures, systems, and policies.
- Typically, an existing business comes with legal rights like patents and copyrights which can end up being very profitable.
All of these pros certainly help your ability to acquire financing for your purchase. As you know, lenders are risk averse. They want their clients to have a healthy credit score, a history of on-time payments, and collateral. Collateral is often the hardest part of this equation, but buying an existing business solves that. In fact, there are traditional lenders who prefer to finance small business owners who are purchasing an existing business—provided they’re willing to put down somewhere between 20 and 50 percent.
Purchasing an existing business isn’t for everyone. Buying a business can be more costly than starting from scratch. However, it’s often easier to get financing to buy an existing business than to start a new one. Before you make your decision, weigh your options, and talk to a lending professional. An online marketplace is a great place to start when you’re looking for the best acquisition loan or startup loan to suit your needs; you can examine the pros and cons of a variety of loan products from a variety of lenders, all in one place.
Lendio’s funding managers are experienced with a wide variety of funding options for a wide variety of business needs. From purchasing a business to getting equipment, Lendio can help you get the money you need.