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Buying an established business helps you avoid the fear factor

Buying an Established Business Helps you Avoid the Fear Factor

Many people dream about starting their own business, but only a few dare to make those dreams a reality. The fear of failure is often a factor behind their inaction. When you look at the numbers on new business success rates, it’s no wonder that people are scared. It’s tough to make a go with a new business–up to 60 percent fail in the first couple of years. Did you know that there’s a way to avoid failing with a new business? Buy an established business instead.

Business studies have proven that when new owners buy an established business, they are much less likely to fail. There is much less risk associated with buying a business compared to starting one from a bare bones beginning. Let’s review the advantages of buying an established business and discover why it’s such a good idea.

When you purchase a business that’s already operating, you can review real, actual results. You don’t have to base your purchase decision on estimates of the market or projections of profit. Whether or now there’s money to be made in a certain market sector or industry is something you can easily determine in a review of the financial statements.

When you start a new business from scratch, it may take quite a bit of time to start showing a profit. For at least several month, and more likely for a year or two, you’ll have to deal with negative cash flow and lean profits. You’ll be burdened by a shortage of cash and you may get tired of being creative with what you have. When you buy an established business, it should provide you with cash flow right away.

Unless it’s a one-person operation, starting a new business means finding and hiring employees to help out. You’ll need to train them in the procedures of your new business, and you’ll have to pay them of course. An established business will already have workers in place. Many new owners of existing companies often find that the employees are the best source of training and information.

Have you considered how difficult it might be to find honest and cost-effective suppliers when starting a business? Purchasing an existing company means you get to take advantage of all the previous owner’s work in finding and negotiating with business suppliers.

When you buy a business, not only do you get the existing supplier contracts, you also get a ready set of customers. An established business means established customers and referral business. These already existing sales will help to add to your positive cash flow and also reduce your need for immediate marketing.

Depending on the service or product your new business will provide, there are certain permits and licenses you have to get before you can do business. You’ll also have to reckon with federal, state and local regulations related to various issues. One of the biggest advantages of buying an existing company is avoiding the immediate need to deal with this red tape. Plus, pretty much everything you’ll need to renew the licenses and permits should already be in the files.

If you work things right, your purchase of an established business might come with a bonus. If the seller is available and willing to work with you as a consultant for a few months, you can get some valuable information on running the company. The previous owner is a great source on knowledge on finding opportunities and overcoming obstacles.

Are there any disadvantages to buying an established business? You might have to invest more money up front to cover the higher purchase price of a successful business. On the other hand, getting financing should be a snap. You’ll be able to show the bank or your investors a track record of profit and performance, as well as a fully-developed business plan.

When you’re shopping for an existing business, don’t limit yourself to companies that are currently for sale. You might be able to make an offer on an existing business that’s not officially on the market. Buying an established, well-performing business in a profitable market can help you avoid years of risk and put you in charge of a vital, growing company.

Basics of appraisals and its methods

Basics of Appraisals and Its Methods

A real estate appraisal is nothing but the assessment of the rights of ownership of a property. The appraiser is required to define the rights, he or she intends to apprise. The value is not created by the appraiser; the appraiser actually tries to interpret the market to arrive at the estimated value. As the appraiser gatherers relevant data to a report, some consideration must be given to the amenities and to the site, as well as for the physical conditions of the property. However an appraiser might spend only a small period of time for inspecting the properties, but this is only the beginning. A considerable amount of research, as well as collection of general and specific data has to be accomplished, previous to the appraiser’s arrival which is the final opinion of the value. Since there are various types of values, such as the fair market value, tax value, insurance value and the value in use, which is the need to correctly define the purpose of the appraisal. An appraisal helps in numerous ways; it lowers you tax burden and helps you make one of the largest financial decisions in your life.

An appraisal is an act or process of estimating value or giving an opinion of that value. This opinion or the estimated value is obtained by means of three common approaches which are all obtained from the market. The cost approach is to find out the value that needs to be estimated, what it would cost to reproduce or replace the improvements as of the date of the appraisal, the functional obsolescence, less the physical deterioration and the economic obsolescence. The remainder or the remaining value is added to the land’s value. The comparison approach to find out the value makes use of other ‘benchmark’ properties of similar quality, size and location which have been sold recently. Actually a comparison is made to the subject property.

The income approach to determining value is of most important in ascertaining the value of income producing properties and has lesser weight in properties in residential places. This kind of approach gives an objective estimate of what a practical real estate investor will pay which is totally based upon the total income of the property which it produces. Therefore after careful and detailed study of all general and specific data which is gathered from the market; a final opinion or estimated value is correlated.

Mejo is a Copywriter of Glendora reo appraisals He written many articles in various topics. For more information visit: Indio reo appraisals Contact him at premiersappraisal@gmail.com