Using Your New Business to Take Over an Old Business

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The best job you can find just might be one that you buy for yourself with a business acquisition. Buying an existing business is really the purchase of a career. It’s a sound consideration for an entrepreneur. Establishing a new corporation is conducive to purchasing an existing business.

The new corporation you start doesn’t have to establish an entirely original business. Instead, it can become the successor to a company that’s already operating. Your corporation simply buys the assets, business name, and customer base of an existing enterprise. You then take over the lease, employee arrangements, sales in process, and good name of the business. But you don’t inherit any of the debts, payroll liabilities, or other legal obligations incurred by the former owner.

Buying a business may require a substantial amount of upfront capital. But this can constitute less than the eventual investment you might incur by building an entirely new operation. That’s because starting from scratch with no customers and building to the size of an existing company takes plenty of time and money.

The purchase of an existing business by your new corporation provides a proven concept. An operation that already has customers can generate enough cash flow to repay a bank loan for the acquisition in addition to your reasonable salary. After the bank is repaid, you can increase your pay.

In fact, the brand recognition of an existing business can be leveraged to enhance cash flow. With a proven customer base, you can engage in efficiencies and cost cutting measures that improve the bottom line beyond what the previous owner realized.

Bank financing is actually easier to find when you’re buying a business. A lender can see the predictable income based upon historical performance. Banks are more reluctant to extend loans to a new corporation that has no proven customers and revenue.

Some of the special value you enjoy from purchasing an existing business is that employees and infrastructure are already in place. You don’t have to create IT platforms, training systems, forms, a filing process, or procedure manuals. With a team of employees already in place, you can concentrate on increasing revenue without concern about finding a staff.

Starting a new corporation is often the groundwork for acquisition of an existing company. This can be the step that makes the entire endeavor a sound investment.