I was reading a newsletter this morning about purchasing a business, which got me thinking. We currently have one business for sale, and just completed the very successful sale of another - so what advice can a realtor offer their clients?
Many people dream of owning their own business one day. Investigating the financial aspect is one of the scariest parts of the process. I usually recommend potential buyers look for a line of credit from their bank - low interest, low risk, and usually the simplest form for a small business. Our local Haliburton County Development Corporation (HCDC) offers assistance to high-risk purchasers and are an excellent resource for many types of info for buyers. It is a good idea to make an appointment and have a chat with your local development corporation just to see what options are available to you.
I have listed below some points from remonline.com - a weekly newsletter I receive about real estate. They offer some very timely and informative articles aimed at realtors, but much of their advice can also be directly translated for Buyers and Sellers. The points below were written by the Institutue of Chartered Accountants of Ontario, and please note that I have shortened them a bit to make them appropriate for a blog. A piece of my own advice, suitable to our region: Haliburton County is, for many businesses, a seasonal area. You will need to ensure your Summer income will help cover costs in the Winter, and you will need the personal skills to avoid spending all that money in the Summer. Budgetting will be your best friend! Here are the 7 points from the Institute of Chartered Accountants of Ontario (shortened):
1. Do your homework. Make sure there's a market for your product or service.
2. Shore up your savings. Changes in ownership can mean changes in revenue. Will you have enough to live on while you get the business on track?
3. Do what you know. If you have a shortage in staff - can you chip in and get the job done yourself?
4. Include a price adjustment clause and a full disclosure agreement in the deal (your realtor can explain further why this is so important).
5. Make sure your family supports the plan. Talk things through with your spouse and children. Everyone needs to understand that income and family time may change, at least for a while.
6. Consult the professionals. Lawyers, chartered accountants and business valuators - who will give you the straight goods on the business you are considering, and your suitability for it.
7. Get lots of advice, then make the final decision yourself.
If you wish a copy of the full article, please email me at terry@remaxhaliburton.com and I can scan and email it to you - then - check out the Bulk Food Store we have listed!
