Being an entrepreneur always comes with both triumphs and challenges. While starting or owning a business is no easy task, there are multiple routes to become an entrepreneur in Canada.
Do you have an existing business that you can expand to Canada? Are you looking to build a new venture from the ground up? If you thrive on the challenge of starting a business from scratch in Canada, then it will involve:
- Doing your market research, writing a business plan, and registering or incorporating your business
- Applying for all the applicable permits or licenses
- Getting the business support and financing to establish and grow your business
However, if you envisage an entrepreneurial journey that involves buying a Canadian business, read on to understand how to go about it.
Should You Buy a Business?
Bitten by the entrepreneurial bug? Skip the trials and tribulations of a start-up business. Buy an already established business in Canada. If you have experience as a serial entrepreneur and are looking to expand your portfolio by owning an existing Canadian business, this option is ideal for you too. No matter how experienced you are as an entrepreneur, buying a business has a number of advantages.
- You get an established customer base, brand value, goodwill, and immediate cash flow, along with a set up location, inventory, tools/ equipment, furniture, staff, or other relevant assets.
- Historical information, such as bank statements, tax filings, and business reports will give you a quick and reliable indication of the best sellers, potential return on your investment, peak business times, and focus areas for further expansion.
While buying a business in Canada may be a great opportunity to make your entrepreneurship dream a reality, no business is free from risk. Sometimes, taking over an existing business may be more challenging as you have to invest more time, effort, and resources in:
- Ensuring a smooth transition for the staff/ employees
- Completing all the formalities related to the change of ownership
- Driving change in the culture, work ethics, or employee behaviours based on your entrepreneurial style and preferences.
Remember to weigh your pros and cons before deciding whether to buy or set up a business in Canada.
What are the Steps Involved in Buying a Business? How to Evaluate a Business that is For Sale?
If you have chosen the route of buying an existing business in Canada:
- Search for Potential Businesses: There are numerous options to search for the perfect one. Online marketplaces, such as realtor.ca, Canada.businessesforsale.com, BizBuySell, Shopify’s Exchange Marketplace or Kijiji are great options to look for businesses that are for sale. You may also be able to connect with potential businesses through brokers, such as Sunbelt Business Brokers, the world’s largest business brokerage firm to buy and sell businesses.
- Do Your Due Diligence: Found a business for sale? Here are the steps to evaluate if it is the right fit for you:
- Contact the sellers, verify their identities, and ask for specifics of the business.
- Sign a Non-Disclosure Agreement (NDA) to get access to the balance sheets and other specific business data.
- Study the financials in details. Besides the annual revenues, business profitability, and tax liabilities, look at the scalability and income generation potential.
- Make sure that the business does not have any pending lawsuits or regulatory encumbrances.
- Check whether the business has a website, social media presence, client reviews, and formal marketing plans or strategies that are flexible and sustainable for future growth.
- Complete the Negotiation: Satisfied with all the checks?
- Submit a Letter of Intent (LOI) to the seller stipulating your interest in buying the business, along with the payment plan, period of negotiation, withdrawal clauses, parties involved, and other relevant details.
- Begin price negotiation based on the results of your due diligence.
- Arrange your finances, and complete the remaining formalities for purchase and transfer of business ownership.
Interested in buying or starting a business in Canada? Find out how to immigrate on an entrepreneur or investor visa. Get in touch with Newcomers Canada and we will point you in the right direction in your entrepreneurial journey in Canada.