Disadvantages of buying a business
Often the biggest hurdle to buying a small business outright is the initial purchasing cost. As the business concept, customer base, brands and other fundamental work are already established the financial costs of acquiring an existing business are usually greater than starting one from nothing. Other possible disadvantages include hidden problems associated with the debtors or stock that may not be worth what they are valued at. Good research and professional advice are essential ingredients on the path to acquiring a business.
Other disadvantages of buying an existing business include:
- Customers may associate the goodwill to the previous owner and leave when a new owner takes over the business.
- Staffing problems/issues
- Some staff may leave when the new owner takes over
- Some staff may be unsuitable for the job they are doing
- Some staff may not approve of the new owner
- You will inherit statutory obligations with regard to their employment
- Plant, equipment, technology may be obsolete or faulty
- The business may not have a good image or reputation
- The cost of acquiring goodwill may be unrealistically high