An existing business has a revenue stream. A business opportunity like many that we sell in the Metro Detroit area has an existing cash flow, be it negative or positive. You have a financial history of an existing business. If the cash flow is negative or not positive enough to justify a high value, you would still have some value in Good Will because an established business comes with a reputation and past customers. If cash flow is not where is should be, the buyer would need to identify things they think they could do to improve profits. Any buyer should believe that they can improve a business they are considering buying.
Another benefit of buying an existing business is the fact that the seller or whoever started the business took most of the risk already. Typically the buyer is buying the name, location, signage, phone number, website and facebook page (if included), past customers and reputation, otherwise known as Good Will. All of these items have been previously implemented and tested and will, in most cases, continue to perform. With many existing businesses for sale it’s not unusual that they come complete with well trained, quality employees and in many situations long-term employees that will help the buyer in numerous ways.
A start-up may be the best choice for many people whether it is a franchise or an independent business, but the initial cash outlay may be out of a prospective buyer’s price range. It’s worth considering that many existing businesses for sale these days also offer seller financing with low down payments available to qualified buyers.
There are many pros and cons when you are considering buying an Existing Business versus doing a Startup. Hopefully this information will help you make the best decision when buying a Michigan Business.