Two Avenues of Buying a Venture

You might have thought about buying a business rather than starting one from the ground up. There are many preconceived notions of which route is the better way to go. The truth in the matter is that both ways of starting a business has its advantages and disadvantages. This post is about buying a business and things you should consider before you take the leap.

First of all, what reasons have brought you to the notion of buying a business. Many times buying a business is beneficial because there is an established customer base and stability in a market area. An established business is often seen as less risky, because it has survived the start up stage. The next question to ask is, why are the current owners looking to sell their business? It is important that they are not selling due to poor revenue or bankruptcy. Even if they profess to be selling for legitimate reasons, it is important that you investigate further to make sure they are telling the truth.

You might also have to buy a business for necessary purposes. These could include obtaining assets, a license, or franchise. Sometimes the only way that you can start a certain type of business is to buy one that already exists. An example of this can be seen in the restaurant business and the obtaining of a liquor license. Some towns have a limit on the number of licenses issued and therefore one business must sell or close down before another business can possess a liquor license.

The best reason to buy a business is if you see potential in it that the current owner does not see. Many new owners of a bought business take the business to new heights. The concept of entrepreneurship is the ability to see what is not there. Buying a previously owned business hangs on this concept. You have the ability to bring a fresh new approach and innovate new ways of growth. Sometimes you see more when you are looking in from the outside rather than being engulfed in the present business. You possess that amazing viewpoint!

There are two different ways in which a business can be purchased. The assets can be bought or the business can be bought as a going concern. Buying a business as a going concern means that the business operates as it was but with a new owner. This means that legally it is seen as the same venture. This presents liability concerns, because there might be legal issues from the previous owner that will pass to the new owner. This is why the asset buying of a business is much more preferable. When only the assets are bought there is no legal responsibilities that can be continued to the new business. That is why you should always go the route of buying only the assets of a business. I know that this is not always feasible, but if you do have a choice then buy the assets only.