Have you bought a business? The following people have. While interviewing them for Sunbelt’s monthly newsletter, we asked them to share what they have learned about buying a business. These are some of their tips on buying a business.
Financing is impotant when buying a business
Like Brian Muldoon, Silver Cross, most individuals who purchase a business are first-time buyers. Brian cautions prospective buyers to look at different options for financing and keep them open. As he found out, banks are not receptive to financing small business acquisitions, no matter how profitable the business or the strength of your own personal accounts.
Reg Ainbinder, Carefree Property Maintenance, has found it helps to connect with a good commercial banker and keep the lines of communication open.
“Let them know what’s going on,” says Reg. “When the time comes that you need them, they’ll be more receptive as they know your business.”
Mike Petryschuk, Rogers Material Handling, contributes, “If you can stay away from banks and loans and avoid incurring debt, do so; the debt will always have to be taken care of first.”
“Make sure your plan is sound,” adds Mike. “Hope for the best but plan for the worst.”
Prepare for additional expenses that you might not have budgeted for, Bill Kenney, ROVIS, stresses.
“Keep the closing date in mind,” Bill adds. “The sale probably will not close on the date originally agreed upon.”
“Get the purchase process started ASAP but prepare for delays. The seller can drag their heels, have trouble finding documents etc. to meet the closing date.”
Using a business broker is the top advice Bart and Shelley Garner, Pet Valu , give to anyone considering buying a business.
“You really need that intermediary. If we hadn’t had Erik Twohig our deal would have died on the vine,” says Bart. Erik owns Sunbelt’s London office.
“Do your due diligence,” Mike stresses. “Don’t be afraid to hire a professional; you don’t want a bad debt or other surprises to turn up later.”
“Make sure you have the best accountant and lawyer,” adds Reg. “And make sure they make sense.”
Working with the seller
It is important to maintain a good relationship with the seller/previous owner, says Bill.
“There is a good chance that you will need their input shortly after the sale closes”.
This advice is echoed by Reg, who “... can’t say enough how important it is to get along with the seller, whether it’s a vendor take back or a partner over time.”
Reg considers himself very privileged to have continued access to the previous owner, even to meet clients.
Having the right mindset
Shane Charania, St. James Gate Restaurant and Pub, is finding his small business is a perfect fit. “Big boats are much harder to navigate.”
Shane’s advice is to “only take on what you’re capable of doing, what you want to do.”
As Terry Herald, Whetham’s Tirecraft Auto, puts it, “… know what you are doing. When you own the business itself, there is no go-to guy, you’re it!”
In that vein, Mike adds, “Be prepared to spend some long hours in the early years”.
Mike Way, USL-1 and his business partner both believe in the power of hard work. “Hard work brings luck,” says Mike. “You’re eliminating the odds.”
Fortunately for most small business owners there is real enjoyment in what they are doing and accomplishing and even though in the early days the hours may be long, it somehow doesn't seem like work.
Mike Petryschuk concludes: “Follow your dreams. If you think you can do it and you want to do it, proceed with it.”
And don’t forget to have fun, says Reg.
“Come into work every day with the mindset that you’re going to have fun. If you’re having fun, your staff will also have fun and they’re the ones taking care of the clients.”
Have you bought a business? What advice would you add?
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