Why Buy a Business Instead of Starting one?

Good morning Buyers!

Starting a business from scratch isn’t the only path to entrepreneurship. Buying an existing business can often be a smarter, faster, and more profitable way to get started. But why?

This week, we’re diving deep into the key reasons why buying a business might be your best move.

 “Risk comes from not knowing what you’re doing.” – Warren Buffett

Deal Tip of the Week: Buy Time, Not just a business

When you buy a business, you’re not just acquiring assets—you’re buying years of work, existing customers, and proven operations.

Starting from scratch means years of trial and error. With an existing business, you get a jumpstart—revenue from day one.

Acquiring a business means you inherit its customers, brand reputation, and market presence. This head start allows you to focus on growth rather than building awareness from the ground up.

Starting a business is risky—statistics show many fail in the first five years. With a purchase, you get access to past financials, sales history, and operational insights, reducing your risk.

🔍Understanding Transition Risk

The biggest risk in buying a business is losing momentum during the transition. Smart buyers prepare for this by negotiating a proper handover period.

Checklist:

• Ensure the seller provides training for a minimum of 3–6 months.

• Negotiate a clause for ongoing consulting if needed.

• Review employee stability—will key people stay post-acquisition?.

🗯Expert Soundbite 

“The biggest advantage of buying is the proven track record. You don’t guess—you know.” — Jason Freedman, Serial Entrepreneur

Hidden Costs to Look For

Buying a business can save you time, but it's crucial to know the hidden costs. Beyond the purchase price, consider:

• Transition costs: legal fees, due diligence costs, and broker fees.

• Equipment and technology upgrades: are the systems current, or do you need to modernize?

• Staffing adjustments: will you need to hire or replace key positions?

Mini Market Watch

Q1 2025 Trend: Multiples are softening slightly for Main Street businesses (under $1M revenue), according to BizBuySell’s quarterly report.

Buyers have more leverage—use it to dig deeper during diligence.

Today’s SBA Rates

The SBA 7(a) loan program offers both variable and fixed interest rates, which are based on the current prime rate of 7.5% plus an allowable markup. The maximum allowable rates are:

• Variable Rates:
  ◦ Loans over $50,000 with terms under 7 years: up to 9.75%

  ◦ Loans over $50,000 with terms over 7 years: up to 10.25%

What’s Next

Next week: “Types of Businesses You Can Buy”

Forward this to a friend thinking about buying a business—or hit reply and send us your biggest buying questions.

Until next week,

— The Practical Buyer Team 

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_{Keep in Mind: Practical Buyer is for informational purposes only and does not constitute financial, legal, or investment advice. While we strive for accuracy, all content is provided "as is" and may not reflect the most current industry practices or regulations. Always consult with a qualified attorney, accountant, or advisor before making any business acquisition decisions.}

_{The authors and publishers are not responsible for any actions taken based on the information in this newsletter.}