Always wanted to start your own business? It’s the ideal moment in British Columbia to buy an existing small operation, without some of the challenges of starting your own. Here’s how to approach acquiring an existing small business.
By Tracey Rayson
It’s easy to see the benefits of acquiring an established successful small business in a thriving community. As B.C.’s rural economy continues to strengthen and diversify, entrepreneurs considering relocating to more-bucolic locales to purchase an existing business can profit from a lower cost of living, less competition and vibrant communities with hyper-connected neighbours. Here are some tips to help navigate the small-city investment opportunities that exist throughout the region, and what to know before you buy.
DO YOUR RESEARCH
If you’re looking for the most comprehensive strategy to determine both the ideal location for your family’s quality of life and the right business investment opportunity, The Great BC Business Sale (bcbusinesssale.ca) by Community Futures is a must-see event. To be held on October 3, 2020, at the Vancouver Convention Centre, it will include hundreds of exhibitors under one roof including not only small business sellers but representatives from non-metropolitan B.C. communities, government programs, real estate firms, economic development offices, business lending insitutions plus other business service providers.
“In terms of investigating all the great places to live in B.C., you can do it in one day; there’s never been an opportunity like this,” says Darrell Goertzen, project manager and business advisor with Venture Connect (ventureconnect.ca), a Port Alberni-based resource for buying and selling business, with loads of practical information about transitioning ownership of a small business. “It’s the first event of its kind: business opportunities come together with community information and community representatives you won’t get elsewhere,” Goertzen raves.
Demographically, nearly half of the small businesses in B.C. are predicted to sell in upcoming years, triggered by the looming generational turnover. According to the Government B.C. website, more than 1.3 million British Columbians will be over the age of 65 by 2031. “One out of every four business owners in rural and non-metropolitan B.C. is expected to exit their business in the next few years,” Goertzen explains.
The biggest economic sector gap is predicted to be in the tertiary sector (services industry). Goertzen says tourism-related and small manufacturing businesses are among the biggest opportunities for successful succession to new owners. He notes that migration to smaller communities in B.C. is “leading to the demand for services in virtually every community.”
For new Canadians seeking entry to the B.C. market, Small Business BC’s Jeffrey Ng, a business broker expert with Pacific M&A and Business Brokers Ltd. (pmabb.com), recommends the BC Provincial Nominee Program, which is a way for foreigners to gain permanent residency in B.C. “Part of the program is based on investing in a business, and favours plans of migration to smaller towns,” he says. “This has prompted interest in investment in small businesses outside of Vancouver.” The welcomebc.ca site has extenstive information: there are streams for entrepreneurs, for those with in-demand experience and education and an express program especially for skilled workers needed in smaller communities. Small Business BC (smallbusinessbc.ca) is a resource for growing and sustaining businesses throughout the province: watch for events and workshops, use free resources online and explore its success stories and awards for best-in-class ideas.
EXPAND YOUR BOUNDARIES
Some of the best conditions for business success are outside larger cities. Community Futures (futures.bc.ca) is a non-profit organization that specializes in supporting small-to-medium-sized businesses in rural communities across the province. With services and tools ranging from loans and support services to business-planning and self-employment advice, its 35 regional locations specialize in growing economic development in every corner of the province.
Salmon Arm, with an investment climate ripe with opportunities, is just one smaller city committed to supporting new entrepreneurs who are seeking a better lifestyle. “Salmon Arm has a healthy inventory of businesses for sale, generated primarily from successful business owners transitioning towards retirement,” says Lana Fitt, economic development manager, Salmon Arm Economic Development Society. “The community has seen a growing interest in the purchase of local businesses from Lower Mainland buyers as well as international buyers,” says Fitt, referencing the PNP stream for entrepreneurs. “Buyers are being drawn to the community in their search for a desirable lifestyle and a healthy, growing economy in which to invest.”
Other lively B.C. centres of entreprenuerial activity abound, from inland towns to waterfront business districts, all of which lend character to their community and keep profits recirculating in the local economy. Campbell River and the Sunshine Coast region are just two of many B.C. areas that have been particularly welcoming to new business owners.
“For anyone who has been considering making the move to the Sunshine Coast, purchasing an existing small business is the perfect way to realize that dream,” says Colin Stansfield, executive director, Sunshine Coast Regional Economic Development Organization. “Established businesses come with a legacy of community support and a level of customer loyalty that cannot be built overnight and are essential for thriving in any small market economy.”
AN ESSENTIAL CHECKLIST
Business broker specialist Jeffrey Ng offers the following checklist for a successful transition when buying a small business.
- Use a knowledgeable business broker or intermediary.
- Do due diligence: research and understand the industry, talk to local business owners.
- Learn the owner’s reasons for selling.
- Confirm a positive cash flow: you want to buy a money-making asset, not a liability.
- Verify the business has a transferable lease.
- Ensure their books and necessary succession documents are in order.