The Positive And Negative Sides Of Purchasing A Business

If you are considering buying an existing business, you will likely have a sense of security because you’ll have a good idea of what you are getting for your investment. However, not everything is always as it seems, so you need to do your due diligence to ensure you make the right decision.

THE POSITIVES

A business you purchase as a going concern has a lot of advantages over starting one yourself. For example, you get immediate access to things like:

Existing clients and goodwill

Existing clients, customers, providers and staff are included in the ‘package’ if you buy an established business.  Having these resources in place remove much of effort and cost required to produce goodwill, branding, publicising and hiring staff.

Finance and Expenses

Since your business has been operational and your inventory is available, you should only need minimal initial costs. In addition, you can generate cash flow immediately. If you need more funds, it should not be that difficult to obtain them because the business is already established.

Training and support

Training and support can be best given by those who have practical experience with the business. They are the people who can give you the best help that you need.

THE NEGATIVES

Though there are a lot of advantages of buying an existing business, spending a lot of money does not ensure future success.

Goodwill may not remain

When there is a change of owners, there is also the risk of losing customers and clients. Employees may wish to leave and you may have to pay them their separation benefits. The departure of the original owner may negatively affect the business so you cannot really ensure the current sales and profits will continue.

Reputation

The business’ bad standing or poor impression in the past may be harder for you to overturn.

Facilities and Equipment

Facilities and equipment may be out-of-date and may require repair, replacement or addition.

Next Step

  • Carefully look into the business you are interested in.
  • For an expert opinion, set an appointment with your business adviser, accountant or solicitor.

 

Email us at hello@youraccountingpartners.com.au or call 07 3668 0646 for all your accounting needs, bookkeeping, tax returns and compliance, business valuation and business sales.  Support and assistance for your small business needs.

James HuyVuong is a CPA and the owner of Your Accounting Partners. Partnering with businesses from start to scale thru to sale.

 

Posted on 15/03/2017 in Accounting Services

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About the Author

James Huy Vuong the Founder of Your Accounting Partners, a Brisbane based Business support agency. Specialising in providing bookkeeping, accounting, tax and compliance, business valuation and business sales services to local small business owners. His passion for business was evident very early on at the start of his career in accounting. He embarked on an unconventional path away from the traditional position with one of the big 4 accounting firms like most aspiring young graduate in his field. He decided instead through the lure a more diverse role, more pay and a much cooler title to work with Australia largest telco as a Business Specialist. He entered the world of business management and ownership in the hospitality industry for the invaluable hands-on experience one could not get just by reading textbooks, understanding debits and credits and passing exams. Huy has also spent a good part of a decade in the financial services industry owning and managing his family business which has lead him to start Your Accounting Partners. Your Accounting Partners sets out to help time-poor, frustrated business owners do better business by partnering with business owners on their ownership journey and making it together. Your Accounting Partners specialises in hospitality, service-base & professional services businesses. His mission is to help business owners use their business to give back to the family what it takes out. When it comes to business we say "You focus on what you do best, partnering with us and we'll take care of the rest".
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