is an existing successful business buying by far one of the fastest, most cost effective and least risky way, the control of your financial future be , However, the right business to find, work hard, if this is your first step into the unique world is to be an entrepreneur.
In the coming months we will explore what it takes, what to do, it should be in your internal advisory body, and what questions should you ask when a business to buy. If the thought of buying an existing business does not appeal but the thought of financial statements, legal verbiage and all the other fun stuff, then you are in the right place, as this blog is written with you in mind.
One should be aware that some significant benefits of buying an existing business over from scratch are new. To highlight these differences, let us first on the real numbers of small businesses to review them, surviving and financially profitable. These figures, from Statistics Canada may surprise you but to be aware of the facts is the first step to raise awareness.
In Canada make 23% of small businesses that do not start it to their first birthday. Less than 50% of small businesses make it to their third anniversary, and there are more than 80% drop-out rate of companies that survive the first decade. This suggests we have only 20 of 100 companies at the end of 10 years. The average number of years that survived a small business in Canada, is 6 years. Want to know why
With such a great lack of success in small business ownership, we need to understand some of the reasons why more and more companies are not successful
These may:.
- lack of general management skills. A small business owner can be a great technician be, do not yet have the necessary skills to run the business.
- Another critical point is the market identification. Did the owner to investigate properly and accurately and to identify on the market. Is there a market to sell into, and if so, what is the chance that the product or service "companies will give all profits or capture market share?
- Is the company to manage its finances properly? is there an understanding of marketing know-how in the company? What are the systematic steps and procedures for identifying and qualifying opportunities?
- is there a business plan? is the business plan sufficient or is it bad?
- And finally, the company
has the necessary working capital to survive? This last point is crucial is not yet a known element for many business owners until it is too late. So can the concept of working capital show the example use of buying a new car. the new car is one that you for years think of were. Everything about the new car is correct, the color, the design, the engine is powerful and efficiently, and sitting in the car you feel that everything in its place. However, this car is just outside your price range. Following your expert negotiations you get up to the penny of what you can afford. Your last penny seals the deal. The keys will be handed to you, they put into the ignition lock and the ignition key is turned to obtain the dreaded thing ... you are out of gas! With your last penny on buying the new car forgot to put money into the business for the fuel spent. This is the working capital; the gas in the tank. If you forget to put gas in the tank of the car, no matter how big the car is, it will not be moving far.
This is one of the reasons why a company to buy, which is already in operation, generating cash flow and a good result produce one of the quickest and most effective ways to be your own business to run.
on the next post, I will highlight some of the significant benefits of buying an existing business, on the one generating profit.
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