Most people who work in the financial industry get to the point where they start to think about starting out on their own. There are a number of different options available. You could make the transition from individual employee to business owner by buying an existing financial advisory practice, or you could start up your own company, building it from the ground up. Of course, there is no right or wrong answer – it all depends on you. Nevertheless, buying an existing firm can offer many benefits and fewer risks.

It’s your decision

Before going into further detail, it is worth pointing out that this is a personal decision. Everyone is different. What is right for you may not be right for someone else. Nonetheless, a lot of people like the head start that comes with buying an existing firm, as you will already have an existing client base and business model.

The benefits

You will also benefit from an easier analysis of current cash flow and future earning potential. When evaluating the true cash value of a company, it really helps to know much the business makes on a yearly basis. You will have a great starting point for negotiations, and it will make tax planning more straightforward as well. No matter whether you intend to include your tax return as part of your personal taxes or you are going to file a separate business return for your new financial advisory practice, the cash flow analysis will make the whole thing much easier.

What to consider

If you like the sound of purchasing an existing financial advisory practice, there are a number of different factors you need to consider. You need to carefully assess the firm, looking for any alarm bells and understanding the current level of client satisfaction so you know what you need to work with. You need to understand that any change of ownership is going to be a worry for current members of staff. If you do not make accommodations and understand the current culture, you could make the situation much worse.

Where to start

The best thing to do in this scenario is to create a transition plan. This will make the entire takeover process a lot easier, and it will give your current employees peace of mind. The transition plan will give you a good opportunity to get to know the people you are going to be working with while boosting your chances of success in the process. After all, this is a people business, and you need to maintain strong relationships with your employees and your existing client base if you are to be successful.

All things considered, there are clearly many benefits associated with purchasing an existing financial advisory firm instead of building your own business from the ground up. If this sounds like the right move for you, make sure you consider all of the tips above so that everything runs smoothly and you keep both your existing employees and clients on your side.

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