Reasons for buying an existing business?

3 Answers

Relevance
  • 1 decade ago
    Favorite Answer

    Professionally speaking, the decision to buy a business would be after evaluating the incremental benefits of strating a new one. Incremental benefit is computed in the form of the incremental Net Present Value (NPV). If NPV of buying an existing business minus NPV of starting a new business is found possitive one will decide to buy a business.

    The incremental benefits would be achieved through the following ways:

    1) No initial costs (it would be pretty high in most of the cases)

    2) The market presents

    3) Brand name

    4) Less spent on advertisements ( in some cases)

    5) No headache in relation to staff recrutment etc

    Source(s): My experience as a business consultant
  • 1 decade ago

    If you do your "due diligence" properly you will be buying a known quantity.

    Going into business is a risky proposition. When you start a business no matter how good your idea seems to you your business could be either a flop or a fantastic success.

    When you buy a going concern you know what to expect and have a solid base to build on. Two examples Ray Kroc and McDonalds. Howard(?) Schultz and Starbucks.

    Hope this helps

    Jerry-the-bookkeeper

  • 1 decade ago

    It might already have a filled a big gap in the market and have lots of loyal and regular customers.

    It might already be bringing in a decent turnover for the current owner.

Still have questions? Get your answers by asking now.