Selling a business in Canada can be difficult at the best of times. According to the Exit Planning Institute only 30-40% of businesses that are listed for sale actually sell. Often in rural or remote communities the ability to sell a business is even more difficult. However, there are a number of ways that business owners in the north or remote areas can increase their chances of selling their businesses.
1. Profitability: Make sure that your business is profitable. While having a profitable business in the North doesn’t guarantee that you will be able to exit the business when you want, without healthy profits, your business has a much lower chance of selling. There are 7 key areas that you need to focus on when improving profitability and you can email me to receive a copy of that report. Healthy, profitable businesses are valuable and the right buyers will pay good money for them no matter where they are located.
2. Ensure the Business Doesn’t Revolve around You: it's difficult to sell a one-horse show where you are the horse, in any community. It's even more difficult in rural Canada. A vibrant business that comes with a team is much easier to sell than a business where you as the owner are making all the decisions and managing all the sales. Building your team and empowering them to be able to work when you are not around, creates a business that isn’t totally reliant on you and is therefore more valuable.
3. Start planning early: Unfortunately, most people don’t think about selling their business until a catastrophic event happens. They have a health issue, someone close to them dies, a key staff member leaves, or a pandemic hit. In reality, exiting your business should be something that you have spent some time thinking about. This starts with having clarity about when you want to leave the business and what you are going to do when you leave. It also means that you have prepared the business for another set of owners and you have been getting ready in maximizing the value of your business.
4. Be creative with your options: If you don’t think you will be able to easily sell your business, be creative in your options for exiting the business and maximizing your value. This means that you may need to be thinking about potential buyers’ years before you actually sell, grooming those buyers and making it easier for them to acquire you. Staff, competition, friends and family are all potential buyers. Most businesses are difficult to finance with regular banks and so creative financing and horse trading might need to be part of your options. Additionally consider that in many business sale transactions you will have to finance some of the sale of the business yourself as well. What are you willing to finance and at what rates?
5. Get some Help: When you are thinking of selling your business it is important to talk to your accountant to ensure that you have solid financial advice in order to limit your taxes. While your friends and neighbours might be working for corporations or governments that provide them with pensions, as a small business owner, much of your retirement is tied up in your business. Ensuring that you have a clear path to maximize those retirement savings is key to a healthy financial future. Additionally, you will need advice from your lawyer as you proceed with the sale or closure of your business and if you are planning to sell your business, a professional business broker who specializes in selling businesses in the north or rural areas is probably worth seeking out. A business broker will help you sell the business confidentially as well as maximizing the amount of money you can get from your business by ensuring that you get a proper valuation.
Selling your business is perhaps one of the largest transactions that most business owners will ever make in their lifetime. The sale of a business is much more complicated than selling your home and often takes much longer, especially if you are unprepared. Selling a business in rural areas is often more difficult than selling in larger cities for a variety of reasons, however with the right mindset and preparation you can sell your business and get good value for it.
Dave Fuller, MBA, is a member of the International Business Brokers Association. The author of the book “Profit Yourself Healthy” and an Award-Winning Business Coach. Questions about the value of your business? Email dave@pivotleader.com.