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Starting a Business Venture in a New Area

Many newcomers to a region look to a big city as a place to start a new business — or a new life. Toronto is by a wide margin the most popular destination in Canada for investors to start or purchase a small business.

This article will examine the process of buying a business for sale in Toronto, Ontario from the perspective of an out-of-towner. In other words, what is a good approach to take if you would like to invest in a Toronto business if you are not from the GTA.

Determine what you are interested in

The very first step is to determine what type of business you would be interested in purchasing. Buyers of small businesses take several different approaches to determine what might appeal to them:

- Determine a price range and look for businesses in that budget to see what is interesting
- Pick an industry and search along those lines
- Make a list of businesses or industries that you don’t want and be flexible for anything else

However you go about it, it is important to determine what type of company you want to look for. You will need this list for the next step, which is contacting a professional business intermediary in the GTA.

Find a local business broker to deal with

When you are fairly confident in the type of business in the Toronto area that you would like to buy, you will need to be in touch with a business brokerage practice in the city to assist you with your search. Not all business brokers in the Toronto region will conduct searches for buyers so you may have to keep checking back with them to see if any of their listings are of interest to you. Regardless, it is an important exercise to call the broker and formally introduce yourself.

Toronto business brokerages typically deal with dozens of buyer enquiries in a given day so be persistent and patient. Buying a business is a major commitment and most people are expecting a process that is similar to real estate, when in fact it is quite distinct.

When you do talk to a business broker in Toronto, it is critical to be as specific as possible when describing the type of venture you are interested in. Also, most brokerage websites have a section where prospective buyers can register. It is important to register with several different brokerages in order to be pulled into their respective databases.

Visit the city as often as you can

If you are serious about buying a business in Toronto it is important to try to visit the city frequently. There are many interested buyers in the GTA looking for profitable businesses for sale, of which there are a finite amount. Visiting Toronto is important since it will help you acclimatize to the marketplace. You should also try to network in the region as often as possible. Not all businesses in Toronto are listed for sale with business brokers. Sometimes they simply sell if a person is at the right place at the right time.

If you are serious about searching for a business for sale in Toronto that interests you and you are from out of town, be prepared for a rigorous search. Finding a profitable business with good growth prospects takes time under normal circumstances so if you live out of the area, be prepared for a time consuming search. Harness the internet for information and contact a few Toronto business brokers as a good starting point in your search.

A Big Marketing, Business and Sales Mistake That You Can Profit From

A short while back I had a great experience with a plumbing and HVAC company. But recently I opened a letter from them and was totally disappointed.

About a year ago we had a water softener and filtration system installed. It took the Well Company about two days to complete the job. At the end of day to the technician informed me that “All was set!” He told me that it would take about two hours to get hot water as the tank needs to fill up again. Hours later, still no hot water. We opted for heating up water on the stove instead of cold showers. After all, it was winter time.

We wanted to get a plumber to our house right away, but settled on one who could get to us first thing in the AM. They showed up, they were very professional; they put plastic covers over their boots so they wouldn’t track outside dirt on our hardwood floors. Then, they told us what the problem was; the element in the electric hot water heater was “fried.” They said it was “dry-fired.” They took care of it and we got our hot water back. As they were going over the bill with us they offered (and we accepted) a diamond membership. As a side note we luckily hadn’t paid the Well Company, so you can guess who ended up covering our bill. The diamond membership had some cool benefits. But honestly, being a business and marketing consultant, I simply liked their style and the fact that they got the job done! We used this plumbing and HVAC Company a few more times throughout the year.

It’s this “diamond membership” and the way they went about attempting to have us renew it that you’re gonna learn from.

I get this letter from them that looks like an invoice. At first I’m wondering “what’s up” because as far as I know they haven’t been to our house is a few months. I look closer and it’s an invoice for $90.00, the yearly fee for the diamond membership. But here’s the first BIG mistake…

The invoice was all that was in the envelope. No re-explanation of all the valuable diamond benefits. No “thanks for being a diamond member!” And the kicker, a notice that finance charge will be added for late payments! Like I signed some contract to be a diamond member for the rest of my life? Hum, if I did, someone at consumer affairs will hear about it! I also wondered if their dressing up the renewal notice as an invoice was an attempt to fool me – I’m actually a little insulted.

Lesson- Don’t take it for granted that your customers will just “renew” because you said so. This renewal notice should have been accompanied by a sales letter about the benefits of membership along with some irresistible free offer for renewing. Maybe they throw in a check of all systems. Anything of value would suffice. On to the next lesson…

They should be reselling this membership more often than once per year. I don’t associate this treatment with anything “diamond.” Next lesson…

After they apply the first two lessons they’d be ready to implement lesson three. These types of programs are perfect for auto-renew. There’s two ways to do that… They could bill their customers’ credit cards automatically, (As long as the customer agreed in advance). Or, they could make this membership seem less expensive while actually earning more revenue. All they’d have to do is charge eight or nine dollars per month billed to a credit card and their renewals would sky-rocket!

I just couldn’t help myself! These were just obvious improvements that could have been made to this company’s system of taking care of their “best customers.” But I guess they’ll be left to blame their customers or the economy for their lack of care and sloppy work!

The Importance of Keeping Emotions in Check When Selling a Business

If you thinking of selling business, it is absolutely critical that you check your emotions before you embark on the sale process. Many times a small business owner will believe that they won’t get caught up in the heat of the process and just as often an experienced business broker will see that even the coolest of owners can get worked up. This article is a summary of some of the issues a small business owner can get carried away in the sales process.

Time during a business sale when a seller can get emotional…

When listing the business for sale
When you finally decide to sell and contact a reputable business brokerage to assist, it is important to stay rational. Too many time, a company owner looking to sell will have unrealistic expectations about the time it takes to sell a business and especially the listing price. Setting the price of the business too high will may not only result in an unsold company but possible very few phone enquiries also. When you work with a business broker or business valuator on setting a list price, don’t take offence at what you hear. Entrepreneurs are very often emotionally tied to their ventures so hearing a low pricing opinion can be seen as a slight – but it shouldn’t be.

When receiving an offer to purchase the business
When the first offer comes in (especially if it is a real lowball offer) a business seller may get worked up if the price is not close to their expectations. After all, a small business owner can spend years of personal hard work into building up an organization and a low offer may seem insulting. It is important not to take anything personally during a negotiation. Try your best to stay detached and heed the advice of your business broker.

During due diligence
After there is a letter of intent (LOI) or conditional purchase agreement in place, a business sale usually enters the due diligence phase. This is when a buyer scrutinizes the financials and operations of the business being sold. A business owner may feel that their word may not be taken as honest if everything they have put forth is now subject to scrutiny and verification. Again, don’t take this personally. In a business sale transaction almost everything is verified and nothing is personal.

Just before the closing date
Many times, a business owner will get cold feet just before the business transaction is set to close. This is called seller’s remorse. Selling a business is a long process but for the owner that has poured his heart into the venture, it certainly can be painful to depart from the company. Try your best to stay rational during this final part of the transaction. Remember the reasons that you listed the business for sale in the first place. If you decide not to follow through with the sale at this stage, you may very well regret it.