5 reasons to buy a successful company instead of starting one 1. Established Reputation: Buying a successful company means acquiring an

Are you considering starting a new company in 2022? Maybe it's your first company, or maybe you're a serial entrepreneur with some successful businesses under your belt and your next brilliant idea has just been born. You have everything under control, you've worked out a business plan, you're highly motivated, and ready to hit the ground running. But... maybe you shouldn't. In this article, we've gathered 5 reasons why it might be better to buy a company instead of starting a new one.

5 reasons to buy a successful company instead of starting a new one

The harsh reality is that most new companies fail. According to the Bureau of Labor Statistics, about 20% of small businesses fail in the first year, 50% fail in the fifth year, and 70% fail in the tenth year.

A study of 101 startup founders recently revealed the main reasons for the failure of new companies:

● 42% of small businesses fail because there is no market need for their services or products.

● 29% fail because they run out of money.

● 23% fail because they don't have the right team leading the company.

There are, of course, several reasons why new companies fail. As an entrepreneur preparing to start a new company, you're facing a lot of uncertainty. But what if there was a way to reduce this risk?

One of the goals of most entrepreneurs is to become financially free, work on their own schedule, or make an impact - or all of the above. Whatever goal is most important to you, there is a better and faster way to achieve it.

Buy an established company

In most books, seminars, trainings, and online courses you've consumed so far, you've probably only learned one thing - how to start a new company. If you want to achieve your goals faster than you ever thought possible, here are 5 reasons why you should buy an existing company instead of starting a new one.

1. Pay yourself and profit faster.

Most entrepreneurs start a company with a clear goal in mind: to make money. They want to earn good money as quickly as possible so they can use the money to take care of their family, travel more, donate more, spend more time with their children, and so on. However, what most entrepreneurs don't realize when starting a new company is that they first need to invest and this for an unknown period of time.

You'll be paying out of your own pocket for unexpected expenses, unforeseen hurdles, hiring a team, and much more. It will take several months - maybe even years - before you get a single franc back for your efforts.

Instead, buy an existing company that already exists. When you buy an existing company, you can immediately benefit from it and be on your way to the kind of financial freedom you envision. You can spend your time working on the company instead of in it, further increasing your existing profits.

2. The groundwork has already been done.

Another major advantage of buying established companies is that you don't have to worry about building a complete foundation. Just like a house, a company needs a strong foundation to survive. Standard operating procedures, policies, licenses, permits, infrastructure, and the right employees are just a few of them. Not to mention, customers are already there. It takes years to build all these elements from scratch.

When you buy an existing company, you acquire a fully functional ecosystem where all of this is already in place. You can enter as a new owner knowing that the most time-consuming groundwork has already been done and your company is already profitable.

As a buyer, it's your responsibility to do your due diligence to ensure you have all the necessary information before making the purchase, so if you feel that any data has been omitted during negotiations with the seller, ask (more) questions until you are sure.

3. You don't have to use your own money to buy a company.

After speaking with entrepreneurs in my network who have never bought an existing company, I've found that the main reason they haven't done so is because they believe it would strain them - and their bank account - excessively.

The truth is, you don't even need your own money to buy existing companies. Most entrepreneurs are unaware of this, but there are hundreds of strategies to buy existing companies without investing a single franc of your own money. The more equity you can bring in, the cheaper it gets.

One way is to involve the seller of the company in the business. This means you can negotiate with the seller to pay them a certain amount from the company's profits on a monthly basis until an agreed-upon remaining amount is paid off.

Another tactic is acquiring assets of the target company. Investopedia defines this as follows: "When a company buys most or all of another company's shares to gain control of that company. Acquiring more than 50% of the shares and other assets of a target company allows the acquirer to make decisions about the newly acquired assets without the approval of the company's shareholders."

Either way, it's a good idea to consult with an independent expert in financing acquisitions to put together a good, solid, and sustainable financing package.

4. People actually want to sell their (successful) company to you.

I often hear from entrepreneurs interested in buying companies that they don't know why the owner of a successful company would want to sell it.

The truth is, there are many hundreds of successful companies for sale whose owners want to sell as soon as possible. Just to name a few reasons why people sell companies: they want to retire, their children don't want to inherit the family business, or they simply don't want the stress that comes with owning a company anymore. Maybe these people just have more fun and talent in building a company than running one.

However, there is a right and wrong way to approach the owner or seller of a company. When buying a company, it's all about building a relationship with the owner and gaining their trust long before any deal is signed. Similar to dating, it's very important to talk to the seller of the company about their concerns and needs.

5. You can buy with confidence and know that you will benefit in the long run.

If you're still unsure if buying an existing company is right for you, you're probably wondering how to ensure that the purchased company will remain successful and profitable in the long run. Or even become more profitable.

The way to ensure that a company remains successful is to choose companies from sectors that I like to call "recession-proof". As the name suggests, recession-proof companies are companies that are not affected by an economic downturn. Think of food, healthcare, finance.

Companies that offer products and services that people need, not want.

You should also conduct a serious and thorough examination of the company before buying. Check and verify the company's financials. Look at the customer structure, suppliers, and the state of digitization. Examine the online and offline sales channels and always not only ask but also verify individual points. "Does the major customer that accounts for 25% of revenue and 50% of profit really exist? etc..." - Here too, an experienced succession expert can help you, as they regularly accompany entrepreneurs and have experience in buying companies in the same or similar industry.

Key takeaway: Use your skills and the great business ideas you have now and implement them in existing companies. When you buy an existing company, you will not only achieve profits faster but also reach your long-term goals faster.