One of your goals is to run a salon or fashion boutique in Ottawa but acquiring one has implications on your finances, personal life, and everyday tasks once you operate the business yourself. Before doing the purchase, it’s best to consider these questions that might help you decide:
What drove the growth of the existing business you’re eyeing?
Get information from the current owners in terms of the operations, their customer profile, the overhead costs they incur. According to Andy Cagnetta, Transworld Business Brokers CEO, it is vital to know which of the intangible aspects of the business are driving the growth of the business. The business value often has the correlation with the processes and practices observed by the business. This will also help you decide if there’s a need for a revamp or maintain the current status of the business, depends on which will generate more income for the business.
What is the forecast for your chosen sector?
Some industries are challenged but some may be seen to be on an increasing trend, given the economic state. If you’re targeting a food business, you must scrutinize the trends observed for the said sector. Some entrepreneurial approach may have worked before but may not be applicable now.
You must also consider the location of the business. Is it situated in Downtown Ottawa where most commercial establishments can be found? Or is the business for sale that you are wanting to purchase is found in the rural area of Ottawa? Did you get any leads on the development of the area that may affect your business once you acquired it?
Are you financially capable to purchase it?
You should consider that not all of your cash available must be invested in this business alone. You will need to set aside a certain amount of money for possible costs that will still be incurred to make a turn-around for the business. The offer that you will set must be equivalent to the number of available funds you have less the costs and loan amortization (if there is any).
Do you know what “Return on Investment” means?
Compute the profit that you will likely to generate in the next five years. Will the amount compensate the capital you have provided for the acquisition of the business? Try to assess if it will take you a lot of time and effort to recover the amount of your investment.
Is taking the risk worth it?
As per Cagnetta, “The easier it is for a new owner to acquire the business and continue the earnings stream, the more valuable the business.”
Your choice of business must also be influenced by your lifestyle. Will you be willing to take a leap and make major adjustments like relocating in a rural area after years of spending your life in the busy business district? Or will you opt not to leave your comfort zones?
You must also delve into the current financial status of the business and if it is seen to still grow under your management. This is where assistance from professionals may be handy. Before making the big decision, you must conduct due diligence to get vital information about the business that you are targeting. Some professionals like brokers, lawyers, and accountants are in the better position to give you a better understanding of the details of the business provided to you. They may also be able to help you in setting the realistic valuation of the business and make it into an offer.
There are some technical business details that might still be new to you so it’s best to have knowledge of them through the help of professionals who are experienced in this field.
To make life easier for you in your search, you may consult online marketplaces. You can browse and select businesses based on your chosen industry and location. If in case you want to limit the selection to the businesses situated in Ottawa, you may type “business for sale Ottawa” and the website will present all the available businesses in the said area.