Unlocking Success: The Power of Buying a Business vs. Starting One | Legal Lesson Deep Dive 104

"This is about building a business and growing market share."
- Andrew Contiguglia
 
"Over 50 million baby boomers are going to retire, a great time to buy their company."
 - Andrew Contiguglia   

Introduction:
Join me as we explore the advantages of purchasing a business rather than starting one from scratch.

Episode Highlights:

• Understanding Business Ownership Options
  • In this episode, we take a close look at the benefits of acquiring an established business versus building one anew.
  • Discover why buying a business can be a strategic move for long-term success.
• Minimizing Risk and Maximizing Returns 
  • Buying a business comes with reduced risk due to an existing market value, customer base, brand recognition, and proven growth strategies.
  • Instant profits and cash flow are advantages of acquiring a business, setting you up for a stronger start.
• Financial Flexibility and Brand Recognition 
  • Learn about various financing options available when purchasing a business, expanding beyond traditional cash or loans.
  • Instant brand recognition comes with an established business, saving you time and resources on marketing efforts.
• Customer Base and Sales Opportunities 
  • Acquiring a business grants you instant access to an existing customer base, leading to immediate sales and profits.
  • Explore the value of instant customers and the potential for exponential growth.
• Proven Systems and Employee Relations 
  • Existing systems and processes in a purchased business save time and money, aiding growth and scaling.
  • Leveraging experienced employees and established relationships adds to the value of the acquired business.
• Strategic Business Growth
  • Merging, acquiring, or collaborating with existing businesses can lead to synergistic growth and increased market share.
  • Consider the opportunities for pivoting into new industries and expanding your business horizons.
• Legal Expertise in Business Acquisitions 
  • Engage with business law attorneys to navigate the complexities of acquiring a business.
  • Proper due diligence, financial consultation, and understanding acquisition's impacts are crucial for success.

Conclusion:
In this episode, we've delved into the compelling benefits of buying a business compared to starting one from the ground up. 

Don't Skip the Legal podcast brings you insightful conversations with successful entrepreneurs, providing real-world lessons on business growth, legal considerations, and much more. Subscribe now for more enriching episodes and practical insights for navigating the complexities of the business world.

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Disclaimer:

Please note that the legal information shared in this podcast is for general informational and entertainment purposes only. It is not a substitute for consulting with a licensed attorney for specific legal matters. Past performance does not indicate future results; every legal case is unique. Consult your own attorney for personalized legal advice.

Transcript

00;00;00;01 - 00;00;38;18
Andrew J. Contiguglia
Welcome to the Don't Skip the legal podcast. I am Andy Contiguglia. I'm a local Denver attorney and I am bringing you your legal lessons in business. I am here to do a little bit of a deep dove, I guess, on some of these older episodes that we have put together for you. Have you as you've listened to our podcast over the last few weeks or so, you've probably understood that we are taking this opportunity to really reach deep within our community, talk to business owners, talk to former clients of mine, current clients of mine, and really get into what makes them successful in their business and really deep dove into some of their

00;00;38;18 - 00;01;04;27
Andrew J. Contiguglia
legal issues that they have been able to experience. Bringing lessons to you, the listener, in order to learn from their past mistakes. So you don't have or you don't make the exact same mistakes that they made growing your business as well. Looking back at the episode with Robert Grieve and his creation of Northlands Collision Center, his story is really unique, started off sort of within the automobile industry and then eventually bought Nylund's Collision center.

00;01;04;27 - 00;01;30;27
Andrew J. Contiguglia
And so that sort of prompted me to think of you. All right, let's talk about why it might be in your best interest as you look at starting a business. Why buying a business versus starting a new one might be your best bet. Why start from scratch when somebody else has already built it for you? So let's talk a little bit about the benefits of buying a business versus starting one because starting a business really can involve a considerable amount of risk.

00;01;30;28 - 00;01;54;28
Andrew J. Contiguglia
This includes risks like financial risks, competitive risks, and strategic risks. When you purchase a company, this can really result in instant profits. So you don't have to worry about cash flow as you get this business running underneath you. I mean, if you're considering buying a new business, listen here at the accountability law firm, we are here to help. And I want to give you here nine reasons why to buy a company versus starting one.

00;01;55;06 - 00;02;24;02
Andrew J. Contiguglia
So let's talk about this. Number one, considerably less risk when you buy a business. Your purchase already has a market value. It already has a customer base. It has brand recognition and a proven growth strategy and success. When you go in to buy a business, you have these metrics already in place. You know what the brand, you know what the business, and you know what the customer base is going to return to you in terms of the form of the investment that you put in.

00;02;24;11 - 00;02;43;00
Andrew J. Contiguglia
It's no secret that most startups fail within the first five years, so why not start a business by buying one? The risk of failure is very high. When you start a business, you don't have the same resources and there's less stability. Buying a business helps you gain these things, and helps you gain traction right out of the gate.

00;02;43;16 - 00;03;06;06
Andrew J. Contiguglia
So if you purchase a business that is already lucrative, it's less risky than starting one on your own. The company already has a strong foundation and you will have less financial stress because it will be a proven model for you to move forward on. Number two, several financing options are available to purchasers. Now, there are multiple ways that you can structure a business purchase deal.

00;03;06;16 - 00;03;42;26
Andrew J. Contiguglia
It doesn't have to be through cash and it doesn't have to be through a loan. Purchasing an already-established company offers many more financing options than starting a new one. And this benefit you can take advantage of. If you go to our website and you look at financing options, look it up in our blogs, you'll see that we have many ideas in terms of being able to buy a business, many of them, without putting any money, taking any money out of your pocket, getting SBA loans, looking at owner, looking at owner financing ways that you can purchase a business without having to extend yourself.

00;03;44;09 - 00;04;06;18
Andrew J. Contiguglia
Number three, buying a business gives you instant brand recognition when you purchase a company. The business comes with an established brand. There is no need to start this business from the ground up, so you won't have to focus on brand building or investing considerable money into marketing. Trademarks and copyright. These things are here for you. It is what you are building.

00;04;06;18 - 00;04;31;18
Andrew J. Contiguglia
It is goodwill. It is the brand behind the business. This opens up time for you to focus on the other essential parts of the company, rather than having to start from scratch and build your business from scratch and build the brand recognition from scratch. Number four Buying a business gives you instant customers. A business is nothing without the people that it serves.

00;04;31;20 - 00;04;52;21
Andrew J. Contiguglia
So a pool of current and past customers is an invaluable asset. I've worked with many businesses selling them and buying them. One of the greatest things is buying a business that gives you an opportunity to have an established customer base. People who already want to do business with your brand. People who already want to work with the company that you are now serving.

00;04;52;29 - 00;05;19;04
Andrew J. Contiguglia
Not only will you avoid the costs associated with marketing and establishing a new brand, but you have this customer base that you can work off of and you can build with. So you have an instant group of people who want to utilize your business. These instant customers are an invaluable asset for any company to have. Imagine being able to start your business and have an immediate customer base without having to start from scratch.

00;05;20;13 - 00;05;43;15
Andrew J. Contiguglia
Number five along with this comes instant sales. Remember those customers that I talked about just a second ago? Well, listen, these customers stayed around to be a part of your business for a reason. That reason is for you to sell to them. This means that you will get sales immediately without spending the time or the money required for start-ups to get the sales.

00;05;43;23 - 00;06;01;26
Andrew J. Contiguglia
Startups have to start from scratch. They have to go out and they have to find the customers they want to sell to. They have to build a brand and get gain an interest in what it is that they are developing instant sales with the customers. This is available to you immediately. And this brings us to our next point.

00;06;02;05 - 00;06;35;21
Andrew J. Contiguglia
Number six, instant profits. All right. So what happens when you have instant sales? Well, this means that you instantly get profits. It is rare for a startup to start making sales and profits immediately. Many businesses ultimately become profitable, but the degree of profitability really depends on a number of different factors. So if you take your processes and you take your systems and you integrate these into a strong foundation of an established company, this automatically leads to growth and gain.

00;06;36;01 - 00;07;06;28
Andrew J. Contiguglia
Simply put, because most startups fail, money issues are going to be a component of that. It takes a lot of money and a lot of risks to start a business. When you have instant profits, you get this availability to scale immediately. Now, although instant profits are never a guarantee, is a great place to start. Number seven Instant contacts with an already proven and loyal customer base.

00;07;07;08 - 00;07;43;03
Andrew J. Contiguglia
This comes to the opportunity for you to nourish those contacts that accompany them. So this means instant connections, instant marketing availability, and instant people who have the opportunity to spread the word about your brand with these business opportunities, with these partnerships, with these contacts. Your company has already an established foundation to build off of. Your marketing efforts really become exponentially reduced when you have a base of clientele and resources to build from number eight instant systems.

00;07;43;17 - 00;08;10;18
Andrew J. Contiguglia
Believe it or not, systems work. Processes work. If you don't have the start of a system available to you when you start your business, that is a difficult place to start from. So when you have a system in place, when you build from scratch or building from a system, or excuse me, building from a business that has current systems in place, this saves you time and this saves you money.

00;08;10;25 - 00;08;43;29
Andrew J. Contiguglia
This then allows you to grow and scale your business faster. So an already established and successful business will have a proven system in place and a good track record that you can then build from and grow exponentially. This instant systems helps you. Number nine, instant employees, right? Your growth will obviously include being able to utilize the knowledge and the know-how the people who have contributed to the success of your business.

00;08;44;13 - 00;09;08;03
Andrew J. Contiguglia
Not having to train new people. Not having to go out and hire new people in the systems and the processes of the company that you've purchased, as well as being able to build employee relationships with the customers. Having to recreate that. This is going to help your business flourish. Having these items in place is a turnkey opportunity for you to take this business and grow and take the good things.

00;09;08;03 - 00;09;30;14
Andrew J. Contiguglia
Get rid of the bad things and really move and scale your business forward exponentially. All right. So buying a business is an excellent way to build an existing business. Existing businesses are already profitable, and this opens up countless opportunities for your growth. As we mentioned earlier, startups have limited cash flow, which is why many new businesses fail within a few years.

00;09;30;24 - 00;10;00;10
Andrew J. Contiguglia
So by acquiring a company, you gain access to all the people, all of the systems, all of the brandings from the company, and everybody who is working there. The business already has a strong foundation and a foothold in the market, which then limits the risk of failure and guarantees your success. Now merging companies or acquiring a new one, can bring out many new opportunities, and I think it's something that you should seriously consider before going out and starting a business on your own.

00;10;00;19 - 00;10;23;23
Andrew J. Contiguglia
Look at what opportunities are available to you. Merging a business. Bringing value to both companies. Collaborating with another business in the same market space or in the same lane as your business. This creates a synergistic effect. The combining of these two companies in the same business space produces the potential for growth and opportunity. And that's what this is about.

00;10;23;28 - 00;10;52;07
Andrew J. Contiguglia
This is about building your business, taking over the market, market share, growing, and creating opportunities not only for yourself as a business owner, but also the people that you serve. So don't miss out on great opportunities. It's really apparent that over the next ten years it is estimated that over 50 million baby boomers are going to retire. Over 10 million of these people are business owners, which means it's a great time to start looking around for potentially profitable businesses that are going to gear up and get ready to sell.

00;10;52;17 - 00;11;11;27
Andrew J. Contiguglia
So buying a new company is also a great way to pivot into new industries, providing you with new opportunities for growth and flourishing of new business. All right. At our law firm, we can help you grow and we can help you scale your business through the buying and the selling of companies. Our team can help you create a purchase agreement that sets forth the deal of the terms of your purchase.

00;11;12;06 - 00;11;40;15
Andrew J. Contiguglia
We can help you close the deal, and we can help you structure the business in a profitable way. Our lawyers are also here to help you draft letters of intent to help you determine the purchase price. Deal structure, expectations, ideas for closing and other vital details. So our business law attorneys are here to help potential business owners complete their due diligence, validate the purchase price of a new company, and to hire, excuse me, and to determine the value of the assets and the liabilities of the company.

00;11;42;12 - 00;12;02;10
Andrew J. Contiguglia
So let me remind you, if you are interested in buying a business, make sure you hire a legal expert to help you when you're buying a company. It's crucial for your service for you to use the services of a business law attorney or a specialist to determine how much you should pay for a business. Our lawyers, we can help you determine the deal structure that benefits you the most.

00;12;02;21 - 00;12;28;00
Andrew J. Contiguglia
So whether you own a start-up business, a family business or any other type of business, it's critical that you speak with financial professionals, business professionals, or other people within the industry, other business lawyers, about whether acquiring a business is the right decision for you. Because without the right plan, without doing the proper research, and without really understanding how an acquisition can affect your business, your organization could be at risk.

00;12;28;10 - 00;12;47;28
Andrew J. Contiguglia
Right. So reach out to us. See what we can do to help you consult with one of the attorneys here at our firm. Helping and helping an expert can ensure that you make the right be the right decision while protecting you from disastrous errors. Thank you for tuning in again. My name is Andy Contiguglia reminding you to don't skip the legal.

00;12;48;09 - 00;12;48;22
Andrew J. Contiguglia
Good luck.