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Buying an existing business is, in general, less of a risk for you as the major investor. You have the opportunity to watch the business in action, and you will be able to access the historical financial information to determine patterns such as growth rate, profitability, and solvency. You know that you will be able to generate a return on your investment almost immediately as well as be remunerated for your management role in the business (and perhaps also your operational role).

You may choose to buy a business because you want to quickly introduce a new product to an existing customer base before there are too many competitors in the market. For example, if you have developed a brand-new print-on-demand self-serve book station, you may want to have instant access to a thriving bookstore’s customers before copycats come on the market.

Here are some of the pros of buying an existing business:

• Obtaining external financing can be easier than if you build a business from scratch because the business has a track record

• You can market your existing products to a new customer base

• Managing and fine-tuning an existing business model can be easier than building it from the ground up

• You can generate profits right from the purchase date

• You can continue the business with the existing goodwill and name recognition

The cons to buying an existing business include the following:

• You may be inheriting the hidden headaches of the previous owner

• You may be inheriting negative goodwill if the business has a bad name in the community

• It may take as long to reshape the business the way you want it as it would have taken had you started a new business from scratch

• The clients you are “buying” may have only been loyal to the former owner and may choose not to stay on as clients when you take over

Decide which priorities are most important to you and make your decision to build or buy a business based on sound reasoning.