At Ridgeline Brokers we are dedicated to helping business owners position their businesses for sale now or in the future.
As a first-time business buyer, you will quickly realize, “you don’t know what you don’t know.” We know because we have been in your shoes. We also know that before you start seriously shopping or making offers, you must understand how a business valuation is calculated and what business financing options are available to you. Buying a business can be one of the biggest decisions you ever make. Choose the right business, and you set yourself up for the freedom, flexibility, and sense of pride that being a business owner brings.
Ridgeline Brokers can help you navigate the process of buying a business. We are there for you every step of the way, and we specialize in selling businesses that are solid investments. Each business we sell has:
• Clean Financials: Accurate books and records, including tax returns
• Clear Intentions: Written contracts authorizing us to sell the business
• Ready-to-Sell Pricing: Realistic prices based on actual business value, not emotions or best guesses
Unlike other brokerage firms, over half of Ridgeline M&A advisors have been business owners. With a keen understanding of what it takes to both buy a business and to build a business from scratch, we recommend considering the following points if you are thinking of buying a business vs. starting one.
Starting a business from scratch requires an all-in single-mindedness that is committed to choosing the business over all other obligations. As a startup entrepreneur, every decision and outcome is on you. Perhaps you are interested in owning, running, and growing a business, but without the do-or-die pressure of getting (and keeping) a startup off the ground. Buying an established business allows you to build on an existing foundation rather than submit to the all-consuming nature of starting a business from scratch.
How much capital do you have available? One benefit of starting your own business is crafting it according to your available capital. It’s true that buying an existing business will have upfront costs. However, it is also easier to get financing for buying a business vs starting one. Lenders and investors are much more comfortable working with a business that has a proven track record.
An existing business, in most cases, will generate cash flow while most startups will not. Startups require an upfront investment with little to no initial return. Consider how long it may take to break even and how you will continue to fund the business (and support yourself) until it becomes profitable. On the other hand, a business worth buying will have existing cash flow that will free you up to focus on growing the business rather than just staying afloat.
Some entrepreneurs relish the idea of creating a new company identity and building a client base from the ground up. This takes a great deal of time and skill though, and unless this is part of your specific passion, the lack of an existing client base will be more of a liability than an opportunity. Consider that a business worth buying will have already established recognition and credibility, which will provide a solid foundation on which you can continue to build.
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