Why do so many entrepreneurs run into trouble when they buy an existing business?

1 Answer

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are a number of possible answers to this.  Let us look at two of the most important.

First, when someone buys a business, it must mean that someone else was willing to sell that business.  Of course, there are times when the former owners sell because they want to retire.  However, it is also the case that owners will sell businesses when they can no longer make the businesses prosper.  It is hard to come in as a new owner and turn this situation around.

Second, a business that already exists will already have a certain reputation and image.  A new owner may come in and put up “under new management signs,” but this may not really change how people perceive the business.  The new owner might be weighted down by the existing perceptions of the business that they are buying.