The start-up scene is an integral part of the economy and is often discussed in this regard. The current challenging economic time, however, is associated with many risks. Buying a company offers an exciting alternative for prospective entrepreneurs.
Table of Contents
Why Does It Make More Sense To Buy An Existing Business Than To Start A New One?
Building a company involves a lot of effort. It costs a lot of time, energy, and, above all, money. After all, the business idea has yet to be proven, and systems and processes must first be implied. Customer acquisition is often tedious initially, as there needs to be a marketing strategy or sales. Over the next few years, building up a suitable reputation and acquiring know-how is necessary. In contrast to an existing workforce, new founders often need help finding the right employees and training them. Most recently, newly founded companies are only in the black after an average of three years. This means that everything that has been earned usually has to be reinvested.
Can You Say, In General, What Kind Of Companies Are The Most Profitable?
Service companies typically have high margins, are easy to run, and are the easiest to scale. This is mainly scaled through personnel and processes. In addition, the customer cannot compare “apples with apples” so easily with a service company, unlike traditional retail. One advantage of this is being able to call up higher prices. In addition, no logistics and no procurement of goods are required, which can be an enormous advantage given the current situation around supply chains. Another perfect business opportunity is a system-based business model such as a “Software as a Service” (SaaS) company. These are almost infinitely scalable and very lean to operate. However, there are few of these for sale in the market precisely because of the ease of operation.
What Are The First Steps To Take When Buying A Company?
It is optional to look for the cheapest company, the most likable seller, or the most profitable company. Instead, the investment object should match your ideas and requirements. It must match the desires and expectations. In addition, the company size should be chosen according to the desired earnings, but you have to be careful not to overestimate yourself here but rather to grow continuously. Another critical point is the seller himself: 50% of deals fail due to the seller’s idiosyncrasy. After all, the seller is also the one you must get along with. Last but not least, business founders should make sure that the company can also be refinanced. Especially in companies where many hard assets such as real estate, machines, or extensive inventories are also sold, it is often challenging to repay the borrowed capital due to the ratio of EBIT and sales price.
Keyword Digitization – Are There Suitable Tools That You Use? If Yes, Which?
Digitization does not mean having specific tools, using a tool, or having a beautiful website. Digitization relies on remodeling certain building blocks of the business model to shift individual processes to the Internet. This can be, for example, the customer acquisition process, the recruitment process of new employees, or the staff training process, to name a few.
Which KPIs Should Be Most Attention To When Acquiring A New Business?
The typical entrepreneur focuses on sales and EBIT (earnings before tax). However, these figures are meaningless without considering the “big picture.” In addition, the company’s nature plays a much more significant role. This includes, among other things, the positioning, the value chain, the employee structure, the owner dependency, the marketability, or the scalability.
