Whether you’re considering expanding your business into the Canadian markets or starting a new venture, buying an existing and operating company is one of the choices that can give you an advantage. You do not need to start your business up from scratch and through that, you can avoid managing some of the riskiest times of running a company.
If you were to look now, you’d find hundreds of businesses currently being listed for sale in Vancouver and the whole province of British Columbia. Making the right choice in identifying a venture that’s perfect for you will be an essential part of your success story.
What are the advantages of buying an existing business?
The first and most obvious reason to buy an existing company is that you enter into an already established enterprise. You do not need to invest your time and energy – and of course, money – into a more risky project that might require significant spending before it can become profitable. An existing business can generate profits for you from the very start.
If you buy an already operating company, you will also have access to its resources, such as existing locations, customer base, processes, employees, equipment and much more. You will be stepping into a working environment, an established brand and ensuring it keeps on thriving.
You will also have access to the already existing company documentation and financial statements, allowing you to gauge the business’s revenue, expenses and financial projections. This will enable you to understand better where the business stands, identify its opportunities and could also be an essential factor in securing financing and loans for expansion.
What should you look at when considering buying an existing business?
First, you must choose a business that suits you – your experience, knowledge and needs. Buying a new company only because it seems like a great investment opportunity might not be the best choice if you cannot ensure it continues on, or lack the management expertise to make it thrive.
Another important factor will be deciding whether you’d prefer to run an independent business or a franchise. Both options have their strengths and weaknesses. While a franchise allows you to tap into the existing network and receive support from the franchisor, it can also limit your freedom in shaping the business according to your vision or require you to pay various fees. The best choice will vary for everyone and depend on their situation. Choose the one that benefits you the most.
Once you set your basic priorities, you will need to consider several factors when looking into each particular business, from evaluating the business’s financial situation through the actual standing of it and its procedures, resources (like real estate or equipment) and prospects. Those elements will play an essential role in the final deal between you and the previous owners. Proper evaluation of the business will be the key to your future success.
Advantages of buying a business in Vancouver (vs starting a new business)
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- Income from the start: If you choose the right business, you can receive income from the first month of ownership since the company has gone past the start-up phase and is already selling its products and services.
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- Customer Base: Buying a business which has been active for a long time also gives you access to its loyal customers. The business has spent time and money on advertising and getting the word out about its products and services during its active years.
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- Operations: Since you have taken control of a well-established business, that means you also have inherited the activities related to its operations. The company has already figured out the staffing needs, suppliers, inventory management, etc. So you do not have to worry about these issues at the start. Although, that is not to say you cannot improve the operations if you find a better way of doing things.
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- Predictability and Financing: Since the business you buy in Metro Vancouver has a long track record, you can predict how the business will perform during the different seasons of the year. This predictability is also essential for banks deciding to provide business loans. Having access to this history allows you to get financing easier than a start-up.
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- Locking in benefits: These benefits are typically in the form of favourable lease agreements or having the necessary licenses and permits in place. In a city such as Vancouver, leasing a location for a business can be one of the most challenging aspects of starting up. The rental prices for offices, commercial space and warehouses have increased considerably in the last few years. Businesses with a long lease agreement in place when you purchase would benefit from the lower price for their location compared to a new business wanting to start up in that neighbourhood.
Things to look out for when buying a business in Vancouver
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- Not Seeing the Whole Picture: Although businesses for sale have their past financial data which they can provide, it is not enough to judge if a company is doing well and will continue to thrive. You still need to assess factors outside the business, such as the competition, customer and industry trends, and many more factors depending on the type of business.
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- Industry Specific: Some factors become important and must be thoroughly researched depending on the industry of the business. For example, one of the most important things to look out for when buying a restaurant in Vancouver is when the lease expiry is due. Finding a new location will negatively affect the business.
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- Find What Changes After You Take Over: Even though the employees and the operations of a business would stay the same after you purchase it, that doesn’t mean the business would operate the same as before. Many companies rely heavily on their owners to run day-to-day affairs. Since the previous owner would not be in the picture, you need to gauge the effects correctly this would have on the business.
We’re here to help you buy your business in BC
Located in Vancouver, British Columbia, WealthTheory has been helping clients purchase the business of their dreams in Metro Vancouver and the province of BC for many years. Whether you’ve already decided on buying a business in BC or you’re still researching your options, at WealthTheory, we can offer you professional advice and guidance.
Our team will help you navigate the whole process to help you choose the best solution suited to your needs and capacities. We also work with a network of professionals that can help you create the required documentation and conduct the assessments.
Contact us if you need help, from discussing buying a business to going through with the final transaction. We would be glad to share our experience with you and help you start a successful business in Canada.