It is not uncommon for a business broker San Diego to recommend that you purchase a cheap business. This is because a cheap business gives you the advantage of additional affordability and potential for high return on investment. But what exactly are the pros and cons? Business broker can give you the real truth and also help you find the right cheap business to purchase.
Why should you buy an existing business?
This is obviously the first question you will have to answer even long before you contact business broker San Diego. As you may have already learnt, there are many benefits that come with the purchase of an existing business. The main ones include the following:
- The groundwork has already been done to get the business up and running
- It is easier to obtain finance as the business has a proven track record
- It has already established a market for its products
- There is already an established customer base
- Business plans and marketing methods are in place
- There are existing employee
- Many business challenges have been discovered and solved.
Even so, you should not rush into the purchase of an existing business without first looking at the disadvantages.
An experienced business broker can help find the best performing business for you to purchase. He will also enlighten you on the drawbacks of investing in a cheap business. The broker will also make you aware of the disadvantages that come with the purchase of an existing business. The main disadvantages of a cheap business include the following:
- You have to invest a huge amount up front to purchase it
- You must have at least several months of working capital to boost the cash flow
- If the business has been neglected you will have to spend a lot more to revive it.
- You may have to renegotiate outstanding contracts
- The owner might not be selling for the best reasons
- There is a chance not all current staffs and customers will be okay with a new boss.
All in all, buying an existing business is worth it. It is even more attractive when going for a cheap business. Buying a cheap business will not just help you invest in an established business but will also help you purchase it at an extremely discounted price.
The best thing is that most cheap businesses still have an established reputation and location, great employees in place, a good customer base, vendors, cash flow and the facilities and equipment that you need.