Vancouver is a major commercial and financial centre of North America. In 2019, the small business tax rate was 2 percent, making it one of the lowest in Canada. As British Columbia continues to focus on strengthening small businesses and services, now is an excellent time to invest in a business venture of your own. Continue reading to learn how to buy a small business in Vancouver.
Buying a Small Business in Vancouver
Economic development and job creation rely heavily on the small business sector. Still, deciphering which small business is the right fit for you can be a daunting task. These guidelines can help you uncover the perfect small business in Vancouver for you.
What to Look for When Buying a Small Business in British Columbia
When looking for a company to buy, your first decision should be the type of business industry you want to enter. Among the fastest-growing small businesses from 2014 to 2018 were telecommunications, pipeline transportation, rail transportation, and beverage and tobacco manufacturing. If you have any experience in these fields, consider starting your search in these sectors. Once you find an existing business you’re passionate about, start having conversations with the current owner to determine if this will be a strategically smart business endeavor for you.
To start, you’ll want to find out why the current owner is selling their business. Typically business owners sell because they’re burnt out, ready for retirement, or an illness. The leading cause of concern will be if they’re selling due to financial burden.
You can also get a better sense of the overall health and challenges of the business in these conversations. Ask how they’ve solved problems, business debts, and brand issues over the years. Talking to the existing owner as well as customers, employees, and neighboring businesses should give you a better picture of how the business is doing, without the owner’s personal bias. With this information in mind, you can start to assess whether or not you’re prepared to meet whatever challenges the business faces.
Real Estate and Equipment
The next conversation you’ll want to have is regarding the assets included in the sale. If the current owner owns the storefront of the business, you’ll want to find out if the deed will be a part of the deal. If they lease the building, you’ll have to start negotiations with the landlord to work out new leasing terms.
You can also get a better sense of the overall health and challenges of the business in these conversations. Ask how they’ve solved problems, business debts, and brand issues over the years. Talking to the existing owner as well as customers, employees, and neighboring businesses should give you a better picture of how the business is doing, without the owner’s personal bias. With this information in mind, you can start to assess whether or not you’re prepared to meet whatever challenges and resources the business requires.
Documents and Paperwork
Reviewing documents and paperwork from past years will give you an idea of the current state of the small business. Ask to look over tax returns, yearly reports, and auditor’s letters. These records will give you an idea of the cash flow and annual revenues you can expect as the new owner.
After you’ve answered these questions, and you’re still interested in acquiring the business, you’ll need to determine the asking price. If the current owner used a professional valuation service, the asking price is, more than likely, an accurate representation of their current standings, and therefore will be less willing to budge during negotiations.
Once you’re able to agree on a number, you’ll need to determine the best path towards acquiring the capital you’ll need. There are a number of ways to finance a business acquisition, and an independent financial advisor can help you make the right choice for you.
With the above details addressed, you’ll know if this is the business for you. If the answers align with the goals and ideas you’ve set for yourself, then you’re ready to make an offer. Consulting with a business broker can relieve the stress that comes along with a new business transaction. A broker can help you cut out failing companies, keep negotiations running smoothly, and assist with the paperwork that comes along with a business acquisition.