Risks of buying a finished business
For a beginner entrepreneur there are several opportunities to start a business.
Start developing the company from scratch. In this case, the entrepreneur must independently: develop a detailed business plan, identify with the product sold, create a supplier base, attract customers, and establish business relationships. Such a start of a business will require a cash investment that will not immediately pay off. This is the most expensive method and if there is no "economic vein", it will become, at one hundred percent of the hundred, unprofitable for a beginner entrepreneur. After registering a trademark, you may need to protect your intellectual property. In this case, you just need to go to the site and get acquainted with such a service.
In the franchise, get a ready-made business model for rent. When using franchising, it's not necessary to invent anything new. Ready business plan, registered trademark, established relationships with suppliers, customer base - will be transferred under a franchise agreement.
Buy a ready-made business. In this case, the company passes (re-registered) into the ownership of the new owner. With such a method, it is completely unnecessary that the owner gets rid of a loss-making company. Some businessmen earn exactly this type of business, specially creating, preparing and then selling business.
When buying a finished firm, the undoubted advantage is that a novice entrepreneur receives a ready-made business. The business itself has already been registered, its model has been developed, there is a business reputation, logistics has been established with its partners, there is a customer base and money has been put into market promotion. The main attraction for young business people is that there is no investment required to promote the product, and the invested means bring profit. Unlike franchising, the trading platform becomes a property, and is not leased for a specific time. Such a trading platform can then be sold.
Having bought a finished business, the businessman saves nerve cells and forces. The main task in this case will be to correctly and skillfully take control of the company, earn the trust of employees and determine the goals of further development of the enterprise.
Of course, not so much cloudless and this way of starting a business, and there are its pitfalls. The main such pitfalls will be the lack of objective data on the state of affairs in the firm. The performed inspection can not immediately reveal all the problems, and the sale of the company will be hidden debts on obligations to suppliers or customers. Claims after the sale of the sale will be presented by the creditors to the new owner.
In order to avoid overpaying for the business being purchased, a comprehensive assessment is required, and independent evaluators should be invited for objectivity. It must be taken into account that the prospects for business development in the market play an important role in price formation. When assessing the movement of working capital, it is better not to rely on accounting. The objectivity of a firm's assessment based on managerial accounting will be higher, allowing to anticipate many problems in the future.
One more problem is the ready business will become the staff, accustomed to the style of work of the previous leadership. Considerable moral effort may be required to work with the staff and not to disrupt the working staff. The tension in relations between the company's team and the new leadership may end in mass layoffs, and as a consequence of additional costs.
No business enterprise can do without risks, therefore, before each transaction it is necessary to weigh all the pros and cons and not take rash, momentary decisions. This is especially true for start-up entrepreneurs, who biasly assess risks. For them, an attractive moment to become a lack of investment in the promotion of the company, with the ability to receive income immediately. At the same time, the stage of a serious check of the state of affairs in the company is completely ignored.