I recently received an email from someone asking advice about buying an existing business. The emailer explained that the business had been around for a while, but didn't have many customers and wasn't profitable.

They wondered if it would be a good investment.

My reply . . .

An existing business with only a few customers is not really an ongoing business -- it's a full time job without pay. What you're really buying is the urgent need to invest valuable resources trying to refloat a sinking ship.

When you buy a business, much of the value of the business is in how much of the work needed to make the business profitable has already been done for you.

If the business is not already profitable, it generally indicates there are problems with either the business model, the target market, or (rarely) the current owners.

Often, the current owners are much like passengers on the Titanic - they know the business is sinking and want to get out before it goes under.

Thinking you can refloat the Titanic is a noble, and frequent mistake, made by eager entrepreneurs.

Most people wouldn't have paid to board the Titanic after it started sinking. You shouldn't either.

Better to start off on a ship that is fully afloat when you come on board.