All entrepreneurs who have built businesses from scratch know how difficult the task of doing so can be. Having to compete with establishments already existing within the industry is can be tough, especially when the competitors have created brand names well-known and trusted by the targeted market. |
That being said, businessmen usually opt to buy a business or franchise for sale instead. By doing so, the risk of being cast into the depths of financial ruin will be minimized, and at the same time, potential income streams increased plus stabilized.
However, buying just any existing franchise for sale doesn't always guarantee financial success, especially if improper evaluation of the business is conducted. With that said, it's safe to say there are both advantages and potential disadvantages when it comes to purchasing a currently owned franchise.
Aside from having a well-known company name, a buyer may look forward to having a complete and updated inventory, rather than having to purchase everything on his own. For example, building a restaurant from scratch will require the creation of new recipes or menus that customers actually like. On the other hand, such a task is already taken care of when opting to buy a business that's already setup.
Another plus for acquiring an existing establishment is the ability to evaluate operating expenses and cash flow better, which in turn gives the future owner an idea on how much he needs to invest for further development. Putting up a business from scratch will make calculating these figures harder and longer.
Lastly, buying an established business will allow the future owner to determine which products/services are most sought after by the market, and how much customers are willing to pay. Moreover, an existing customer base has been created as well.
Putting up a company from the ground will leave a long trial and error process for determining which products/services are likely to receive positive responses from the customers. Additionally, there'll be a need to create a solid customer base as well.
However, opting to buy a business that's up and running has potential disadvantages as well. The current staff may not warm to the idea of working under new management so well, therefore potentially causing a variety of labor issues.
Also, the seller could be downplaying or even withholding current company-related problems from the buyer. The establishment's books could be spruced up to reflect minimal operating costs and boost profits. Falling for such a trap can be easy, but be avoided with the help of an auditor.
There are of course, other advantages and disadvantages when it comes to buying a currently owned franchise for sale. While the benefits naturally outweigh the potential hindrances, the latter can be reduced through thorough evaluations and proper management.
Mike Moore is published on more than 300 websites. He writes success and business articles that cover topics from home based business, business start up, and franchise success . He is published on various website including http://www.franchiseharbor.com
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