Becoming an entrepreneur is a grand adventure, but not everyone wants to start from scratch. In fact, many entrepreneurs are electing to purchase an established business for sale because it gives them an existing book of business that will help them grow faster than a startup. In some cases, high-performing franchises with healthy revenue streams become available when their owners elect to move on to the next phase of their lives. Opportunities such as these are among the most coveted businesses for professionals with capital to invest.
Here are some tips and advice for entrepreneurs who are interested in buying an existing business:
- Bring your preferences to the franchisor. Investing in an existing franchise opportunity can be a jumpstart of sorts, but whether it is a jumpstart towards profitability or failure is dependent on your own due diligence during the research phase. In truth, existing or new franchise opportunities are available to you and each offers distinct advantages. However, in order to fully analyze the health and value of the franchisor and its existing business, you really need to rely on experts to guide you. This means meeting directly with officers of the corporation as well as several active franchise owners willing to give you an insider’s perspective.
- Measure the variables. When it comes to properly measuring the variables of the business you are buying, my colleague Ron Rubin puts it best: “When buying an existing business, it is important to review the profit and loss statements for the last three years to help establish the correct price to offer the seller. It is equally important to analyze the potential that the business has. I have seen many businesses for sale that have an owner that wants to retire who has not been working on growing the business for the last number of years and a business like that has great potential for growth. It is particularly interesting when all of the fixed costs are covered and a large percentage of the new business turns into profit.”
- Be prepared to reassure the existing client base. As a prospective buyer of an existing business, you need to be eager to not only maintain, but build upon the trust that may exist in the current customer base. Maintaining healthy relationships and preserving the value of that all-important goodwill means handling the change of ownership with great care. If you elect to become a franchise owner, you are in luck because the mentorship from your franchise leadership will help guide you through the transition, and you won’t be alone during the transition of ownership phase.
- Nurturing the sprouted seed that is an existing business can really pay off. Ultimately, franchising can be a rewarding adventure into the business realm with opportunities to thrive as an owner whether it is a new or existing franchise opportunity. If you are examining an existing business you may find that the chance to save time and money with a location that is already equipped and operating is attractive for a variety of reasons, and that it simply makes sense for you. After all, many entrepreneurs choose to “hit the ground running” rather than starting from scratch to give themselves a head start on legwork and potential profitability thanks to an existing book of business.
If, as a new business owner, you infuse an existing business with an enormous amount of enthusiasm, knowing that by the time you make your purchase you have secured the proper training and support from a solid franchise system, you will have created the framework for a potentially rewarding entrepreneurial experience. The biggest keys are to build upon existing goodwill with clients, capitalize on inroads made in the community, and have a sound business plan in place that will allow you every opportunity to open the floodgates to an already flowing revenue stream.
Matthew Peretz is regional vice president for Minuteman Press International for the St. Louis and Minneapolis regions. Matt provides valuable ongoing support to Minuteman Press franchise locations in his area. Learn more about Minuteman Press franchise opportunities at www.minutemanpressfranchise.com.