Once you have decided you're ready to buy a business its time to find the business of your dreams on Otonomy. Otonomy will let you search for businesses for sale across Canada, and give you an easy to use marketplace where you can learn about available businesses and connect with sellers.
As you build a shortlist of businesses you are interested in, the time has come to engage with the experts, organize your finances, and learn more about the industries and businesses you are considering.
Engage With Experts
Having strong professional advice is essential to the due diligence process. At a minimum, you will need the services of a lawyer (to draft a purchase agreement, review registrations and licenses and to advise on any other potential legal hurdles) and an accountant (to advise on the financials and operations).
Organize Your Finances
Buying a business is a significant investment so pre-planning and organization are essential. You may not be able to purchase the business without financial assistance (banks, investors, personal loans). As such, it will benefit you greatly to spend time reviewing your options and building a business plan for the business you wish to own. Items to consider:
- The purchase price of the business.
- Any immediate outlays costs that may be required at the time of purchase or in the immediate term.
- Loan repayments and servicing costs, if applicable.
- The working capital requirements for your business and your cash flow projections.
- Professional fees and charges related to the purchase.
- Any other ancillary fees that may be generated as part of the purchase.
If you choose to apply for financing for your purchase commercial lenders will consider the following criteria to assess your loan application.
- Ability to service the loan (interest and periodic repayments towards principle)
- Security in the form of collateral or other fixed assets.
- The financial history of the business including profit & loss, and cash flow forecasts (forecasts need to be supported by realistic assumptions about future trading).
- Most financial institutions will require a full business plan.
It is important that you are able to supply all of the information requested by a potential lender as failing to do so will greatly reduce your ability to secure financing. Check with your lender in advance to gather their specific requirements. You can also work with your experts and ask for their assistance on funding paths.
Industry and Business Research
- Review any news articles, posts on industry association websites, and speak with experts in the space to determine future trends and current industry information.
- Ask who the competition is and what does the business you are considering do differently that gives an advantage.
- Visit the location (if a retail business) at different times of day/night to gauge traffic and demographics.
- Review the business's website, Google Business listing, and any other marketing materials and/or customer reviews.
- Try the business's products/services.
- Ask the seller (or their agent if applicable) why the business is for sale.
- Talk to the business's customers and suppliers.
- Review any publicly available credit and corporate information about the business's structure, owners, and directors.