Briefly describe the advantages and disadvantages of buying an existing business
What will be an ideal response?
Answer: The advantages of buying an existing business include the following:
? A successful business may continue to be successful.
? The business may already have the best location.
? Employees and suppliers are already established.
? Equipment is installed and its productive capacity known.
? Inventory is in place and trade credit established.
? The owner hits the ground running.
? The buyer can use the expertise of the previous owner.
? The business may be a bargain.
The disadvantages of buying an existing business include the following:
? An existing business may be for sale because it is deteriorating.
? The previous owner may have created ill will.
? Employees inherited with the business may not be suitable.
? Its location may have become unsuitable.
? Equipment and facilities may be obsolete.
? Change and innovation are hard to implement.
? Inventory may be outdated.
? Accounts receivable may be worth less than face value.
? The business may be overpriced.
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What will be an ideal response?
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