Why entrepreneurs should consider buying an existing business

Growth opportunities for small businesses are tightly limited in the current economic climate, with organic growth particularly difficult amid high inflation and low consumer confidence. One of the few reliable routes to growth that companies and entrepreneurs can still turn to is M&A and, with distress high and many businesses struggling to access growth funding, there are no shortage of acquisition opportunities available to those with the means to complete deals.

For that reason, many entrepreneurs looking to execute business plans they've been developing for a while, as well as companies seeking to bolster their growth and diversify their revenue by moving into new sectors, would be well advised to consider acquiring an existing business in their chosen field, rather than starting a new operation from scratch.

That's not to say that those eyeing a new venture shouldn't take the plunge and start their own new companies, but it's important to acknowledge that this may be a far slower route to growth and profitability that acquiring a business that is already established in its sector. Here are some of the key advantages that acquiring an existing company can offer over starting a new business.

1 – Instant Business Infrastructure:
Purchasing an existing company is less demanding than starting one from scratch. While the acquisition process has its challenges, it's undeniably less burdensome overall.

A major advantage is inheriting an already established business infrastructure. Much of the groundwork has been laid out, from business plans to operational procedures. Though adjustments may be necessary, the company is operational upon acquisition and more well-primed to move into growth mode.

Most enticingly, you gain instant access to an existing customer base, contacts, suppliers, and partnerships—assets that can take many years for a new business startup to cultivate. Moreover, acquiring an existing business means immediate cash flow. While you have the option to invest, there's no waiting for returns.

2 – Access to People:
Acquiring an existing business also means gaining a team of employees, managers, and directors who are already familiar with the business. They bring valuable experience and expertise, easing your transition.

Recruitment and training have already been handled, so you have a skilled workforce ready to execute your plans.

An often overlooked benefit is the freedom it grants you as an entrepreneur. With an existing team, you can take breaks without worrying about business operations coming to a halt.

3 – Proven Concept, Reduced Risk:
When acquiring a business, thorough due diligence ensures you choose a proven concept. Unlike startups, where success is uncertain, you enter with confidence in the business model.

The market for the product or service is already established, allowing you to focus on growth immediately. Additionally, you inherit a financial track record, providing insights and facilitating access to financing and investments (more on that below).

Acquiring an operational business mitigates some of the risks associated with entrepreneurship, offering a smoother path to success compared to starting from scratch.

4 – More Chance of Securing Funding:
One of the major barriers to growth facing UK startups is tight financing conditions, with the UK's uncertain economy making banks and others more risk averse and less likely to provide funding for companies that don't have a significant track record of success.

While funding can still be difficult to secure, your chances are greatly improved by being able to demonstrate an established business model and strong financial history. With external funding, businesses can significantly accelerate their growth plans, investing in things such as new technologies, workforce expansion and even bolt-on acquisitions.