March 19th, 2008 by Johnny Cashflow
It has been my experience from starting businesses from scratch to buying existing businesses with cashflow that it isÂ best to buy one that you have historical data.Â Â
Reliable Cashflow:Â When you buy an existing business,Â you are assured of immediate cash flow. My first hand experience is that when starting a business from scratch, cash-flow can be anyone’s guess no matter how great the business plan.Â We have written some wonderful business plans and executed based on financial proforma only to fall flat on our faces.
Banking on History: When you buy an existingÂ business, historical financial data allows you toÂ understand the finances and the business. I don’t have to tell you that when starting a business from scratch, looking at other similar businesses is not as beneficial.Â Existing businesses will give the added peace of mind of knowing what you are getting in financial returns and how you can slowly improve them.
Experienced Staff: When you buy an existingÂ business, you will have trained and experienced staff who will continue to make you money.Â When starting your own business you will beÂ be doing all the work in the beginning and they don’t call it sweat equity for no reason.Â When you are ready to hire people that is a whole other issue whenÂ you are trying to recruit competent people.
Â Happy Customers: When you buy an existingÂ business, you will have existing customers who know what you deliver and what to expect. If you start a business of your own, you are starting from scratch where you will be using that sweat equity I was telling you about to make sure that your product or service is selling and youÂ will also have to deal with all marketing related issues.
Successful Future: When you buy an existing business, the historical data of the companyâs past gives you a safe picture and a peaceful sleep filled nights knowing what to expect of your future. As I mentioned earlier, when starting a business, you will start with a business plan and there is no real understanding of what to expect of the future.
I would like to end this posting by telling you that there are many more reasons, but these are the main reasons.Â So let me know what you guys at financial resource think.
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