3 Tips on Buying a Business
Updated: Dec 2, 2020
1. How is the business unique?
If there is a particular business you are interested in buying, don’t rush the process. Take time to consider why you are interested in making an investment in it. What makes the business different from its competitors – is it its desirable location, is the product or service one-of-a-kind, and so on.
2. Do your research.
You don’t want to find yourself in a situation where you’re finding problems after you made an investment. Do your research to learn about every aspect of the business you are thinking of buying:
a) Familiarize yourself with the product or service.
- Who are your suppliers, customers, and competitors?
- Speak with customers about what they like or don’t like about the product or service.
- Find out about the company culture by talking to management and employees.
b) What are they saying about the company online? Do a quick Google search to find information such as reviews.
c) What are the finances like? Ask to audit the company’s books to ensure they are in good financial standing with no major debt issues, lawsuits, and hidden costs.
3. Have the seller stay on.
To ensure a smooth transition when you are buying a business have the seller stay on for as long as you can – at least 1-2 years. This will help you ease into running the business and it will make the employees feel more at ease to know that the seller is not just abandoning them but making sure they are in good hands.
You can watch President of TorontoEntrepreneurs.ca Marc Belaiche, CPA, CA discuss buying a business in this video here.
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