It’s a well-known fact in investing circles that one of the best times to buy a business is in the midst of an economic downturn. You can often get a struggling business at a discounted price and then streamline its operations so that it can survive the slow period. Today we’re going to look at the process of finding businesses for sale in B.C. and how to decide whether to make an offer.
B.C. is growing at the fastest rate of any province in Canada.
The population of British Columbia continues to grow and is expected to hit 5.1 million this year.
The influx of new consumers makes B.C. an excellent place to look for business acquisitions as it tracks towards becoming the second-most populous province in the country.
1. What kind of business acquisition are you interested in?
You don’t want to jump blindly into purchasing a business, as this can spell disaster. But the purchase process isn’t as daunting as you may think at first.
The first step is to choose which type of business you want to run.
If you hate the thought of dealing with people day in day out, then running a coffee shop is a bad idea. Maybe you should look at a dropshipping business that’s already established. This is a business model where you sell products that are stored and shipped by someone else — all you do is the front-end promotion.
But if the rumble of people talking and the idea of interacting with different personalities every day excites you, that coffee shop could be a great idea.
It’s also a good idea to look at which types of businesses are thriving in the current economic climate. For example:
- Purchasing a concert venue seems like an idea with lots of extra roadblocks as the world deals with COVID-19 and should probably be avoided for now.
- Surprisingly, a number of my local non-franchise coffee shops have said they are seeing more people walking in, while their costs have gone down because they don’t have to clean up after patrons sitting at tables. Online ordering and walk-in traffic has kept them right where they need to be.
2. Identify available businesses for sale in B.C.
Don’t limit yourself to searching online, though.
Get in touch with your local chamber of commerce to see if they know of any businesses for sale. Google the trade publications for your desired industries and look for ads of businesses for sale in B.C.
It’s also worth looking around your local area for business owners who may be interested in selling.
- Do you see any businesses that haven’t moved to online sales and curbside pickup?
- How are they doing compared to their competitors?
Purchasing a business like this and improving its processes could be a great way to get a deal on a business you could end up loving. So take this opportunity to get to know any business owners you come into contact with as you search:
- Is there a reason they haven’t updated their services?
- Does mobile ordering fill them with dread because computers are out of their comfort zone?
- Are they ready for retirement and business investment seems like a thing they will never recoup before they retire?
3. Evaluate the price
Once you’ve identified a business that fits what you’re looking for, it’s time to decide if the price is fair. That means looking at their books.
To start, see if all their permits are up to date. Are there any outstanding health violations, or issues with any level of government that you’d have to take care of?
Have they kept their facility in decent repair, or will you have to spend money bringing it up-to-date?
Is the business in a good location, or will it become a good location in the foreseeable future?
Where I live, they’re finishing off a new downtown core with a bunch of shopping and increased foot pathways. Purchasing a business in the downtown core could yield big benefits when this development brings more business downtown.
Don’t forget their digital properties
On the digital side, what does their website look like? Is it a current design with good functionality, or has it been left to languish for a long time? Does it display well on mobile devices and is it accessible for all types of users? Is the system used to manage it homegrown, or is it using a well-known content management system like WordPress where you can easily find someone to update the site for you?
Editor’s note: Need a website for your new business? Let the pros at GoDaddy create a professional, mobile-friendly site for you. Or build one yourself with GoDaddy’s free do-it-yourself tool, Websites+Marketing.
Review the numbers
Finally, what are the financials like? Does the business owe outstanding debts to anyone? Do they have lots of receivables that are old, meaning you’ll need to chase down people to pay you? What is the value of the physical assets of the business?
It’s a good idea to enlist the help of a professional assessor and accountant.
You’ll need to figure out if all of the items above combine to make the price fair for you.
Remember, figuring out the price is a negotiation. You need to be open to listening to the business seller instead of getting a single price stuck in your head and never wavering.
A good time for business acquisitions
While business acquisition may seem like a bad idea during COVID-19, this is an excellent time to acquire the business you’ve always wanted for a discounted price.
Make sure that you find a niche you like and take your time evaluating the business instead of jumping on the first opportunity that comes knocking on your door. Best of luck!
The information contained in this blog post is provided for informational purposes only, and should not be construed as an endorsement or advice from GoDaddy on any subject matter. Always consult an investment professional before making a business acquisition.