In this article we analyze the costs and benefits of buying a registered trademark or a going concern instead of starting one from scratch. Taking over an existing business can be an opportunity and/or an optimal strategy if the goal is to accelerate growth in less time.
The main advantage of buying a registered trademark that is for sale is time. Instead of starting a process of 12 months or more to register a trademark from scratch, which might not even succeed, you get a trademark that is already registered and established in the market. A significant time saving.
In addition, these trademarks for sale have already been on the market for some time and have an activity that is established or still developing. They also have an audience that already knows them, chooses them, and makes up their group of “loyal” consumers.
Many make their database available, so the new owner can choose to reconnect with every customer who, at some point, chose the brand for its products or services, and launch a new strategy.
Remember that starting your own business unit is always a good way to earn significant profits, but it is also important to know that the risks can be just as significant.
More and more people want to own “something.” The truth is that they don’t know how to do it, or they don’t want to take the risk of starting from scratch. When you analyze the risk-reward ratio of these options, the balance tips in favor of acquiring an already registered trademark, that is, a going concern. If you want to learn a little more about this world of going concerns, we invite you to read Trademarks for sale.
An opportunity for Gen Z, Millennials, and Gen X
Let’s look at potential opportunities to acquire a registered trademark and an existing company. Consider two possible scenarios.
In the first case, imagine an aging business owner who wants to sell the company in order to retire in peace. The business is solid and will have active cash flow, but it may have been neglected for lack of investment in technology and/or more aggressive sales and marketing efforts.
The second case is a company launched by its owner who, after initial success, does not feel able to take it to the next level. In this case, the owner is looking for support or an equity investment, so that an interested party can increase the brand’s equity value, thereby increasing both parties’ income.
We believe these are “ideal” situations for Gen Z, Millennials, and Gen X, since people with these profiles can become co-founders or even buy these companies.
You don’t always need an amazing idea to create a project or own a company. What matters is knowing how to seize the opportunities that come your way.
Buying, or taking an equity stake in, a project or business that is already registered and operating greatly reduces an entrepreneur’s risk compared with starting from scratch, while creating opportunities for substantial returns.
Advantages of buying a registered trademark
There are a number of advantages to consider when buying, or taking a stake in, an existing business instead of starting a new one. We outline them below.
1. A proven business model
Buying a business that is already registered and established is less risky. As buyers, we know the product or service works. Financing a purchase is generally easier than raising financing for a business that is just getting started.
In other words, the business already has customers, revenue, and profits.
2. A registered trademark
When you buy a company, you are also buying a registered trademark. The ongoing benefits of any marketing the previous owner carried out will transfer to the new owner. When a name is already established in the business ecosystem, it is easier to attract new business and more customers than with a new company.
Instead of starting a process of 12 months or more to register a trademark from scratch, which might not even succeed, you get a trademark that is already registered and established in the market. A significant time saving.
3. Existing relationships
Buying an existing business also means buying a customer and supplier base that took years to build.
4. A narrower focus
When you buy a business, you can start focusing on improving it and growing it right away. The previous owner laid the groundwork and took care of getting the activity off the ground, which takes a great deal of time and energy. Now the buyer can concentrate on growing the business with new products and services, or even simply with better marketing.
5. Experienced staff
In an acquisition, one of the most valuable and important assets you are buying is the staff. With the right team, almost anything is possible, and growth strategies will be easier to implement. Getting to know and evaluating the employees is key when analyzing a company.
6. Revenue and cash flow
A sale is usually structured so that the buyer can cover the money owed to the previous owner, draw a reasonable salary, and still have something left over to take the business to the next level.
Owners of companies created from scratch are often “cash-hungry” in the early days. Some experts even say that new companies are not expected to make money during their first three years. Compare the numbers.
7. Reduced risk
Even with all these advantages, some entrepreneurs believe it is cheaper, and therefore less risky, to start a company than to buy one. But risk is relative. A buyer might pay $1 million, for example, for an established business with strong cash flow of approximately $200,000 to $300,000. A lender will finance that transaction because the historical revenue shows that the cash flow and profitability can support the purchase price.
The decision to buy a registered trademark is yours
If you really want to become an entrepreneur, start researching small businesses in your local community that have the right foundations and could grow dramatically. Look for an aging owner or a sole founder, where your talent, experience, and drive can accelerate the company.
At Eguía Marcas y Patentes, we work with hundreds of trademarks for sale. Connect with us and we will advise you to find the registered trademark you are looking for. Step into a business that is already up and running.
Further reading if you want to register a trademark:
