When dreaming of running a small business, many entrepreneurs automatically think about starting their own endeavour.
There is a second option though: purchasing an existing small business.
But what are the advantages and disadvantages of purchasing an existing small business in Vancouver? Let us walk you through them.
The advantages of purchasing an existing small business
Everything is already set up
There are a lot of decisions to make and legwork to be done when starting a business. When purchasing an existing business, on the other hand, much of the work is done, allowing you to step into an already functioning establishment. This can be especially helpful for first-time entrepreneurs.
Profits from day one
It often takes years for a new business to turn a profit. In that time, owners may have to live off savings or hold down other jobs. If you purchase a healthy business, however, you can have a profit from day one.
With a new business, you do not know if anyone will be interested in the product or service you are providing, especially if you are targeting a new niche in the market. That translates to a higher level of financial risk. By purchasing an established business in Vancouver, you eliminate the risk that there could be no interest in your business.
An established customer base
You also do not have to worry about developing a core customer base. While continued customer acquisition is important, that will be the case with any business. The most difficult part of customer acquisition, however, is building the initial base – and that has already been done with an established business.
The disadvantages of purchasing an existing small business
When purchasing an existing small business, you are paying for the fact that the company is already established. Of course, this comes at a higher cost than starting your own business from the ground up.
Systems are already in place
This was also listed as an advantage – if the systems are strong and correct. If there are any issues or bad practices, however, they can be difficult to fix. Similarly, if there is staff in place already, that can be an advantage or a disadvantage, depending on their work and professional practices, such as employee contracts and unionization.
Potential pushback about a new owner
Employees and customers may not like the idea of the business switching hands. If not, there can be pushback against new ownership. The change can be especially challenging if you are making alterations to business practices or staff.
There are many advantages to purchasing an existing small business r, but it is important to know how to navigate or avoid the disadvantages. Given this, if you are looking at purchasing an existing small business, always make sure to consult with a small business lawyer.
At Benchmark Law, we will always perform due diligence on the business an entrepreneur is looking to purchase to make sure there are no legal implications. The last thing you want to do is buy a business only to find yourself in legal trouble!
There are many ways a small business lawyer can assist your business – no matter what stage you are at. If you are purchasing an existing small business, starting your own business, or running everyday operation, get in touch with us to discuss how a small business lawyer can help.