Buying an Existing Business
There are many reasons to buying an existing business. The number one reason is having an established, existing flow of income. Many new business never succeed and those that do many times don’t see a positive cash flow for months, even years.
When buying an existing business the cash outlay may be more than a new start up but knowing you have the ingredients for success is priceless. A proven location, product lines, employees trained in the industry and loyal customers are also at the top of the list.
You’ve most likely seen the research data. According to Bloomberg 8 out of 10 entrepreneurs who start a business fail within the first 18 months. It doesn’t take a mathematician to calculate, that’s a 80% failure rate.
- Leadership Failure – if you have dysfunctional leadership, the problem will trickle down and affect every aspect of the business
- Lack of Uniqueness and Value – What sets your business apart from the competition? Branding can help you overcome this hurdle.
- Not in Touch with the Customer’s Needs – It’s not about you and what you want to provide to your customers. Keep your ear close to the customer and adjust the business to THEIR needs.
- Unprofitable Business Model – Failing to plan is a sure plan for failure. Research and review the way industry leaders operate while keeping your uniqueness.
- Rapid Growth and Over-expansion – It sounds like a great problem to have but not having the ability to service your customers can make a negative first and lasting impression.
- Poor financial Management – Implementing a basic accounting system is a great start to tracking your finances. Make sure you know where your money is going and always keep a reserve for contingency financing.
Although buying an existing business does not eliminate all risks, it certainly is a step in the right direction in overcoming these 6 most common reasons for failure.