Business Brokerage
Buy or Sell a Business
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Steve Skrlac, MBA, CFA - sales representative
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Southern Ontario Businesses For Sale
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Buying a Business With The Intention of Improving It
There are many, many small businesses for sale on the open market in Canada that ultimately do not sell. There may be company-specific issues that drive this reality but there are also a large majority of business buyers that are not looking to assume risk when they buy a business.
This article will focus, however, on the subset of purchasers that have the appetite and risk profile where they actively search for under-performing companies. The concept is that they find a mismanaged company, buying it at a discount and then invest in systems, management, marketing, etc. in order to improve the operations and, ultimately, the overall valuation. Often, these types of purchasers continue to run the venture and reap the profits or they look to sell the business for a premium.
Some key value drivers a business buyers can look for in an under-utilized business that they can potentially improve.
Lack of business planning
Small business owners (and many mid-sized ones too) are notorious for not planning, budgeting or setting performance objectives for their companies. The result is usually a lack of focus and decision-making that is reactive in nature. Many times these types of operations lose market share from better prepared competitors.
Businesses that ignore the competition
There are a host of small business owners that only focus on their own shop. The mentality of 'tend your own garden' only works when competitors are not encroaching on the terrain of the business. It is quite frequent for a business owner to be blindsided by a bigger or newer market entrant and not ready to react to the threat.
Poor marketing
There was a time when a majority of small businesses only relied on local yellow pages advertising to market themselves. Very little has improved in recent years. The fact remains that many small business owners do not have the skill or budget appetite to market their businesses to new (or existing) customers. There are many opportunities in the marketplace to buy a small business for sale that could benefit from a little bit of creativity and advertising spend.
Owner does not have an open mind
Some business owners (especially older ones) seem to get set in their ways and are very slow to adapt their businesses, if at all. Because of this, the company suffers. For instance, imagine a printing business that relies on old offset presses to service clients when the industry is moving to digital. There are countless such examples. Business opportunities do exist for the savvy buyer willing to find them.
Doesn't listen to customers
Many small businesses simply choose not to ask their customers for their feedback or input. This is not necessarily an arrogance but is usually due to not being in the habit of doing it. It is work to talk to your clients and solicit their input and many owners may not be used to doing it.
The reality is that many businesses for sale on the market do suffer from one or many of the above attributes. If you are confident in your turnaround ability, then try to take the time to find such opportunities to see if your skills and ideas can add real value. Consult with a business broker to assist you in your search and always work with your professional advisors throughout the process.
This article will focus, however, on the subset of purchasers that have the appetite and risk profile where they actively search for under-performing companies. The concept is that they find a mismanaged company, buying it at a discount and then invest in systems, management, marketing, etc. in order to improve the operations and, ultimately, the overall valuation. Often, these types of purchasers continue to run the venture and reap the profits or they look to sell the business for a premium.
Some key value drivers a business buyers can look for in an under-utilized business that they can potentially improve.
Lack of business planning
Small business owners (and many mid-sized ones too) are notorious for not planning, budgeting or setting performance objectives for their companies. The result is usually a lack of focus and decision-making that is reactive in nature. Many times these types of operations lose market share from better prepared competitors.
Businesses that ignore the competition
There are a host of small business owners that only focus on their own shop. The mentality of 'tend your own garden' only works when competitors are not encroaching on the terrain of the business. It is quite frequent for a business owner to be blindsided by a bigger or newer market entrant and not ready to react to the threat.
Poor marketing
There was a time when a majority of small businesses only relied on local yellow pages advertising to market themselves. Very little has improved in recent years. The fact remains that many small business owners do not have the skill or budget appetite to market their businesses to new (or existing) customers. There are many opportunities in the marketplace to buy a small business for sale that could benefit from a little bit of creativity and advertising spend.
Owner does not have an open mind
Some business owners (especially older ones) seem to get set in their ways and are very slow to adapt their businesses, if at all. Because of this, the company suffers. For instance, imagine a printing business that relies on old offset presses to service clients when the industry is moving to digital. There are countless such examples. Business opportunities do exist for the savvy buyer willing to find them.
Doesn't listen to customers
Many small businesses simply choose not to ask their customers for their feedback or input. This is not necessarily an arrogance but is usually due to not being in the habit of doing it. It is work to talk to your clients and solicit their input and many owners may not be used to doing it.
The reality is that many businesses for sale on the market do suffer from one or many of the above attributes. If you are confident in your turnaround ability, then try to take the time to find such opportunities to see if your skills and ideas can add real value. Consult with a business broker to assist you in your search and always work with your professional advisors throughout the process.