Many people think about starting a business but are afraid to start because there is a lot of uncertainty, there is no cash flow and the business may not survive or you do not have enough capital to keep the business venture going until you reach break even.  Sometimes, it is easier to buy an existing business where you have immediate customer base, cash flow and existing suppliers.  It is also easier to get financing for an existing business rather than a start up. (more…)

Many people want to own a business but do not want to pay the premium for someone to start the business and buy a business.  Remember, you are paying someone who took the risk to determine if the business was viable in the first place.  They have my built up the business over 1, 2 5 or even 10 years.  If you were to start today, your venture may be at risk of survival. A large number of new businesses do not survive the first three years of business. (more…)

You have built up your business from scratch and you go to work everyday in your business, you have a routine, you go home at night, nothing new or exciting happens, is it time to sell your business?  If you do not look forward to going to work everyday, is it time for a change?  How do you know when it is time to sell your business? (more…)

You have been working for someone for all your life, you want a change or you have been given a financial package and now are looking for something to do.  You want to be your own boss and you want to own your own business but you are not sure do you look to buy a franchise or buy a business which is not a franchise?  Franchises and independent businesses appeal to different people, here is a guideline of things to think about: (more…)

You have been to buy a business for sale for a long time and finally found the business of your dreams.  You are about to start due diligence but do not know what to look at.  You have only a short period of time, usually two weeks to ask for information, after which you are now starting to prepare a final purchase and sale agreement.  Here is a partial list of things that you should review during your due diligence: (more…)

There are many different methods of valuing a business.  Some investors use discounted cash flow, others use a multiple of earnings, some look at appraised assets.  If you are in the same business as the business for sale that you are looking to acquire, what synergies exist between the two companies?  The amount of savings that can be generated needs to be factored into the purchase price.  If you are looking to acquire a competitor who keeps low balling the prices, if you were to acquire them, that gets rid of a competitor which will result in higher prices, you need to factor that into the amount that you will offer for the business for sale. (more…)

You are thinking of retiring and your business is for sale.  Is it at the right price?  How was the value of your business determined?  Did you look at historical earnings?  Did you look at normalized earnings?  How did you determine normalized earnings?  Did you factor in the implementation of HST into your calculations of normalized earnings?  If you are currently paying PST for goods and services and currently are located in Ontario or British Columbia, your normalized earnings may be understated! (more…)

You are looking to buy your first business and you have just started your search.  Often it takes up to 12 months in order to buy your first business.  The business that you have found is located in Ontario.  The owner of the business wants a multiple of earnings and you have agreed to the multiple.  Is the multiple based on normalized earnings?  What is the definition of normalized earnings?  Traditionally, it is the earnings that would continue under the new business owner and would exclude any personal or unusual expenses of the previous owner.  No one every considers what happens if expenses are lower for a temporary period or permanently as a result of the implementation of HST?  Should this be factored into normalized earnings? (more…)

You are planning for the sale of your business sometime next year.  In order to attract a higher price, you want to increase your profits as high as possible in the year before the sale.  If you have a business in Ontario or British Columbia, you may have one time opprtunity to save money without having to take any risks, just change the timing of when you do your purchasing.  Usually if it sounds too good to be true it is, but not in this case.  This tax planning strategy is a very rare opportunity to make more money by changing the timing of when you purchase some goods.   If you do the same thing as your normally would do but can make more money, is it worth it? (more…)