When you buy a business, how many hours will you work?  When you are an employee, you may work from 9 to 5 and leave the office   At the end of the day, some of you may think about work, others will not think about work until they show up at 9 the next morning.  When you own your own business, you think about work 24/7 when you start out.  What things do you need to do, how can you improve things, what do you need to order, can you improve efficiencies in what you are doing? (more…)

You have been looking for a business for a long time but have not been in a hurry to buy a business.  Is procrastination to buy a business a good strategy?  When the economy was not doing well, waiting until price of a business to drop may have worked.   In most countries in the world, the economy is improving which should mean that businesses are doing better.  That will lead to more profits.   The deterioration of the economy led many companies to review their internal operations.  many realized that they were run inefficiently and it was possible to improve efficiencies with less staff. (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 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…)

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 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 have been looking to buy a business for a long period of time, you just found the ideal business and now you are conducting due diligence.  When is a good time to close the sale?  Normally, sales for many companies are weak in January and February, pick up in the spring and fall off significantly in the summer.  In Canada I predict that summer will be busy but the months of May and June will be slow.  Why should this year be different in Canada? (more…)

You found the perfect business to buy and not you want to put an offer to buy a business, what do you include in the offer?  Do you offer to buy the assets or the shares of the business?  What are the advantages of buying the assets of the business?  (more…)

You are looking to buy a business and you are aware that a particular business has been for sale for a very long time – 1 year and it is still for sale.  Is it worth looking at, is it over priced?  What questions come to your mind, probably that there is a problem with the business, with the price and possibly the owner?  Is it worth looking further to see if this is salvageable?  Remember, all business are for sale for the right price.  The question will be, is the right price a fair price that makes sense to you? (more…)