Benefits of Buying an Existing Business

Taking that entrepreneurial leap is no easy feat, and one of the very first things you will be choosing is whether or not to begin a business from scratch or purchase an already established one. Each has its advantages, but purchasing one that already exists has several strong justifications, particularly in Kerala, where a favorable business environment is already in place.

Buying an established business gives you instant access to cash flow, an established customer base, and tried-and-tested operating systems. This is to say, you can make money day one, lessening the cost burden and risk that typically comes with startups. Established companies also have trained employees, established supplier relationships, and a brand, so you can concentrate on growth and product innovation instead of having to build from scratch.

1. Established Cash Flow and Existing Revenue

One of the greatest advantages of buying a going concern is the instant level of cash flow. In contrast to startups that may take years to become profitable, a successful business typically has an established customer base, regular sales, and stable revenue streams. This day-one revenue can cover operations, pay off debt, and fund a day-one compensation.

2. Established Customer Base and Established Market Presence

Establishing a customer base from zero takes time, sweat, and significant marketing expenditure. When you buy an existing business, you also inherit its customers, brand name, and market goodwill. Such existing goodwill can be priceless, with the advantage of having a head start and smooth sailing.

3. Established Business Model and Operations Systems

A live business already has attempted in the past and already has a work process, systems, and an established business model. This minimizes the risk of trial-and-error processes typical of start-ups. You are free to focus your energies on making improvements and expanding the business instead of constructing infrastructure systems.

4. Financing is Available

Financing a start-up can be challenging because it entails inherent risk with no financial track record. Or, banks will be more willing to finance the purchase of an established, successful company with a proven history. The proven companies come with concrete earnings, assets, and financial performance history, and hence are more attractive to banks and investors. Banks prefer to finance established companies more than startups because they are less risky. This can result in friendlier terms on the loan, like a lower interest rate and better payment schedule.

5. Experienced Workforce and Established Vendor Relations

Taking over the business also includes the acquisition of an experienced staff of workers who are used to the company’s operations and dynamics. This stability makes it simpler to align and maintain productivity. Existing relationships with vendors and suppliers also enable them to obtain friendly terms and solid supply lines.

6. Lower Risk and Superior Success Rates

It is more common for one entrepreneur’s business to fail, and most new ventures fail to live past the initial three years. However, buying an existing business with a history of profitability and stability lowers much of that risk. Conversely, buying an existing business offers a more secure path to entrepreneurship. Established companies have a proven track record, client base, and infrastructure. This is a massive bulwark against startup risk.

7. Growth and Innovation Potential

While an established business is a good foundation, there are areas of expansion and growth potential. New owners can introduce new concepts, new offerings, or new markets under the established name and customer base.

Conclusion

Acquiring an existing business offers several advantages over starting one from scratch. These benefits include immediate revenue generation, an established customer base, operational infrastructure, and reduced risk. In a state like Kerala, with infrastructureally advanced facilities, pro-business government policies, and an educated workforce, the chances of success are enhanced even further. 

By investing in an established Kerala company, entrepreneurs can leverage such infrastructural and policy advantages, making takeoff easier and success more likely. This approach not only minimizes the risks of startups but also positions the company for long-term development in an uncertain economic climate. It is simple enough to lead the process of business selling or acquiring, but with the right business partner by your side, it becomes a much simpler proposition.

MatchValley is an online platform that bridges buyers and sellers across industries. Our professional services include business valuation, due diligence, mergers and acquisitions consulting, and strategic planning. If you are interested to buy a business or sell your existing business, MatchValley provides you with professional assistance to ease the process and clarify it.