Buying a Established Business

Last Updated/Verified: Jan 4, 2023

Buying a Established Manufacturing or Fabrication Business

Here is what you need to know about starting a business vs. buying an established one. Starting a new business costs 80% less (in most cases) because they fail 80% of the time. This is the same reasons you can't get financing and loans for a new business. Banks manage their risk by knowing what their risks are, however it must be said that, banks have no idea how to establish a value for a business. Established businesses rarely fail while new ones are almost guaranteed to go out of business in two years or less!

The same numbers of 80/20 are true for buying a business. 80% of established businesses will last and 20% will fail. It does not matter how you examine these numbers because they always end the same. One thing you will learn when running a business is that the numbers never change. There are hot streaks and cold streaks but no matter what, the long term numbers are always the same. If you buy an established business then you may expect an 80% chance of success. If you start from scratch then expect a 20% chance of success. It is a fact that an established business has products and repeat customers. As a start up you need to draw customers and that takes time and money. If you choose to start a business from scratch then do you have the time, money and commitment to being a salesperson to make the business successful? Might the answer be for you to save up while working for someone then buy an established business?

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