Buying VS Starting a Business
Buying a businessPosted by Phil Eleson on
I recently shared a post from the Murphy Business & Financial Services corporate site. The article which is linked below talked about 3 reasons why you should buy vs start a business.
A business with a history of success can allow you to step in day one and realize positive cash flow. There have been many great ideas that never made it into the world because their creator did not have enough cash to sustain the development of that idea.
Here is an alternative thought. If you have an idea for a product or service, find an opportunity in that industry or a closely related industry and purchase the business. The existing cash flow of the acquired business can fund your other ideas. I’ve personally executed on this strategy and it can work.
A partner and I purchased an existing distribution business. My business partner had a background in environmental consulting and contracting, and we both had experience in the metal recycling industry. We repurposed under utilized assets and acquired additional trailers to start a Steel Hauling service. We further expanded on the relationship with one of our new customers by establishing a separate division providing railcar cleaning of cars once filled with HAZMAT. Both new services were funded by the acquired cash flows and added significantly to our bottom line.
This is just another twist on how purchasing a business is a better alternative to starting one.