When people dream about owning a business, their first thought is opening a startup and working their way into a full-fledged, functioning company. But there’s more than one way to get into business for yourself. The second path is to buy in. With a wave of baby boomers preparing to retire, finding businesses for sale in Saskatchewan — and across North America — is getting easier, but you need to know where to start.
Part of this process will be searching for what’s out there.
- Sites like BizBuySell.com and BusinessBroker.net are good sources for anyone looking to sidestep the startup stress by buying an operating business.
- If you’re interested in a franchise, try FranchiseGator.com. (Note that one downside with this website is that it’s hard to narrow your search down to just Saskatchewan.)
If you’re only interested in local establishments, BusinessesForSale.com lets you search by province without filtering for industry. This site also provides statistics on the state of various industries.
Related: How to secure a business loan
6 Steps to finding businesses for sale
Finding businesses for sale in Saskatchewan is much like finding them anywhere else. Here are the steps you should take before you make a final decision.
- Choose what kind of business you want.
- Follow leads.
- Do your due diligence.
- Assess the price.
- Find out why the owner is selling.
- Be patient with the closing process.
An investment like this is not one to be taken lightly. Use this guide to buy a business you’ll be proud to own.
1. Choose what kind of business you want
The first step is always deciding what you want to do. Is there an industry where you have experience that could benefit the business? What are your skills, passions and interests? Even if you’re not starting from scratch, you will be dedicating your time, attention and energy to this investment.
Those who are interested in farming or agriculture will find plenty to choose from. Saskatchewan offers many opportunities for agricultural businesses such as:
- Equipment dealerships
- Machinery businesses
There are over 44,000 farms in the province, and it’s an industry where buying in is often the only way to enter.
2. Follow leads
The online marketplaces like the ones listed above are a great place to start and could take you right to the one that interests you.
But you might be able to find owners who are ready to sell without having taken the step to list. It’s time to tap:
- Industry contacts
- Business brokers,
Let them know you’re looking for a business to buy — one of them may have heard of a good opportunity.
3. Do your due diligence
Once you’re serious about a business, it’s time to open up their books. There is a long list of things you need to be certain about. Check to be sure:
- Permits and licenses are all arranged
- There are no liens on the establishment or property
- Certificate of Good Standing and paperwork are in order
- There are no zoning violations
- The business is compliant with environmental regulations
- You are aware of all contracts and leases with vendors and customers, or for property and equipment
- You understand the state of its inventory and equipment
You’ll also want to know the status of the business’ tax returns, cash flow statements, balance sheets, debt disclosures, accounts payable and all other financials.
You will need a team of advisers to complete this step, including a lawyer and accountant.
4. Assess the price
Is the asking price a fair one? There are three approaches for assessing the price of a business:
- Earnings — based on historical and projected profits
- Assets — based on tangible and intangible assets minus debts and liabilities. This approach is best used for capital-intensive enterprises like manufacturing.
- Market — based on the prices of comparable businesses. It’s worth looking at the market to make sure the sales price is in the right range.
Look to your team of advisers for help with this step as well.
5. Find out why the owner is selling
There are many reasons someone might want to walk away from a business they started:
- Lifestyle changes such as a move or health concerns
- Issues you should be concerned with, such as problems with the business
Look for signs such as a lack of market for the products or services, large debts, bad location, outdated equipment or competitors that are too far ahead to catch up with.
6. Be patient with the closing process
Expect delays, paperwork and other hang-ups with any investment of this size. There will inevitably be more steps than you anticipated to the process, such as transferring licenses, acquiring new tax numbers or employer numbers and more.
Upsides of buying an existing business
Buying a business has its pros and cons, but it might be the right decision for you.
With an existing business you get:
A proven business concept
Entrepreneurs are risk-takers. They don’t know if their:
- Idea is going to work
- Chosen market is the right fit
- Enterprise will be a success
It sounds romantic, but it can be a big risk for your financial future. When you buy an established business, you know they’ve already found the formula for running their operations.
Cash flow and a customer base
Your customer base is established already, and you get to start with cash flow, putting you significantly ahead of an early-stage startup. However, you should be prepared for some things to change when ownership changes.
It’s easier to get financing
Although the costs will be higher, you will likely find it easier to secure a loan. When a bank assesses the risks of a loan, they will be more favorable to an established business than your dream of a startup, even if you come armed with a business plan and funding.
Downsides of buying a business
The biggest downside to buying a business is the cost. While you will save on buying inventory and equipment, those are assets that will also be part of the price.
Another risk is that there may be a hidden problem, and that’s why you need to do your homework. Find out why the owner is selling and learn everything you can about the operation before you sign.
Finding businesses for sale in Saskatchewan
Finding a business for sale in Saskatchewan is much like finding one anywhere else. You need to do your research and come up with a plan.
One advantage you have as an individual looking to buy is that many retiring entrepreneurs may not want to sell to a corporation. They want to see the business they built stay independent and thrive for decades to come.
You don’t have to start from scratch to become a successful entrepreneur. Buying an established enterprise can be a smart move in many industries.