5 reasons to buy an existing small business that is failing
Many people would like to own their own business. Setting their own hours, being their own boss, and having the potential to make unlimited amounts of money are attractive ideas for many people. However, starting a business can be daunting. It requires a great deal of money, time, research and knowledge, which often turns people away from starting their own small business.
Some people instead have opted to purchase existing small businesses that are failing. While this can be a risky venture, it can also prove very beneficial as well. The following are 5 reasons to buy an exiting small business that is failing.
1. Price. Some people who are trying to unload their failing small businesses are willing to give it up for a price that would cost less to you to buy than to start up completely. You can then take the money you saved buy purchasing it instead of starting it up yourself and put it towards marketing efforts or ways to improve the existing products or services.
2. You already know what doesn't work. When observing a small business from as an outside party, it is sometimes easier to figure out what is working than it is when it is your own business that you have started and invested so much into. The owner of the failing business should be completely upfront about what is going wrong, so you have a good idea already of what needs to be fixed.
3. There is a built-in customer base. Even if a business is failing, it will more than likely still have a following, however small, of customers or in the very least, leads. This is beneficial because you don't have to start from scratch in finding customers, which many will agree is the most difficult part of starting a business.
4. You can bring new ideas to the business. A brand new owner can breathe life into a failing business and have people excited about it. After you buy a failing business, you can then advertise it as having new owners and hold a "grand re-opening" of sorts, or have "new owner specials" for services. These new ideas and revamping of the company will bring renewed interest and help to get the business back up off the ground.
5. You can skip the start-up. Starting a business from the ground up is hard work. Just starting a business can deplete savings and take a great deal of time. Buying an already-existing business (even if it is failing) will still save the new owners the hassle of the legalities and other complicated and expensive issues associated with small business start up.
If you decide to buy a business that is failing, it is a good idea to already have an idea of how a small business is run, or at least have ideas of how to make it better. This can be through eliminating unsuccessful products or services, moving to a new location, or carving out a niche market. Either way, it is still important to research the company's potential and understand why it is failing before you purchase it.
While it can be risky, when all things are taken into consideration, it can be very lucrative to buy a small business that is failing.