Three Steps for a Profitable Venture in Canada
“It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price” – Warren Buffet
We all have certain goals we’re working toward, often several at the same time. If your goal is to move to Canada through investment, then buying a business in Canada will give you a giant leap toward this goal. However, you do not have to settle for any business that meets the immigration requirements.
In the paragraphs below, we will show you how to invest your money, time, and energy into a worthwhile business, so it delivers both – profits and immigration status in Canada. We can also help you determine which business you should operate in Canada, help you find a suitable business, negotiate the purchase, and take care of all the paperwork.
Let these simple steps be your guide.
1. Research, Research, Research!
Every well-planned business venture begins with serious research and fact-finding. There are several key aspects you need to research in the early stages of the process.
Understanding Your Industry
Begin your business search by narrowing your criteria. Identify the specific industry you’d like to enter, whether it’s entertainment, retail, cleaning services, or whatever you do best.
Do a deep dive into that industry in Canada. Start with the basics, like the industry’s size and the major players who will become your competitors. The government’s Canadian Industry Statistics will be a reliable place to start.
Next, find out what standards and laws regulate that industry in Canada. There may be laws about certain permits you might need, what benefits you need to offer your employees, and more. The best source for this is Canada’s government standards page.
Researching Your Province
Canada is divided into provinces that have their governments. It’s similar to the way the US has a federal government as well as governments for each state.
Different provinces may have different regulations, laws, and permitting processes for your industry. It’s important to research your industry in that specific province. Ontario, for instance, has specific forms and regulations for foreign businesses operating in Ontario.
2. Identify Businesses for Sale
Since you’re looking to buy an existing business rather than start one from the ground up, your next step is to find businesses that are for sale.
Check the Web
In your business search, start by searching the all-powerful Internet. There are several sites where owners list their businesses, such as Business for Sale, Business Sell Canada, BuyAndSellBusiness.com and even the Canadian Realtor site. On these sites, you can narrow your search by province or even the city of your choice.
While those sites are reliable, you can’t trust every website that claims to have business listings. Scammers tend to frequent sites like Kijiji and Craigslist because they’re unregulated and it’s easy for the scammer to appear legitimate.
A helpful hint: you’re unlikely to find a profitable business with true potential for anything less than around $150,000. If a business is for sale for less than that, it is probably not a very profitable business. You need to do more research on the business.
Call a Broker
Another route is to work with a business broker. These professionals specialize in finding businesses for sale and helping you through the buying process.
A business broker can be a sound investment because not only will they save you countless hours of searching, but you’ll have the benefit of their expertise as well. Check out brokers like Western Canada Business Brokers, Sunbelt, or Aldrin Raphael Business Brokers.
Narrow the Selection
After you’ve found a few businesses for sale that interest you, start with some basic fact-finding.
Either contact the businesses themselves or have your broker reach out to them for the company’s corporate tax returns for the past 3 years. In Canada, they will be called T2 Corporate Income Tax Returns, Schedule 100 and Schedule 125. You should also request their filings for the current year for the Goods and Services Tax/Harmonized Sales Tax (GST/HST).
These documents give you an initial look into the business’s gross sales so you can compare your options. While it’s only the start of your research into the financial aspect, it provides an effective starting point.
If possible, it’s a good idea to meet with the owners of your top options. Ask the owners why they’re selling their businesses. Spend a few days in and around each business to learn more about the customers, the typical sales volumes, and the way the operation runs.
3. Bring In the Professionals
Let’s say you’ve researched your options and you’ve zeroed in on one particular business you want to buy. Now it’s time to bring in the cavalry.
Hire a team of experienced professionals to take you through the due diligence process. This extensive research mission should uncover any issues the company may have, like bankruptcy filings, lawsuits, debt, zoning problems, or other disputes that would land in your lap. Your team will be able to assess the risks and determine how this should affect your purchase.
While due diligence is critical in any business purchase, it’s especially vital when you’re buying a business in a foreign country. You need professionals who have expertise in that country’s laws, liabilities, and regulations.
In addition to the due diligence specialists, you’ll need professionals who can help you through the purchase transaction. A business attorney and an accountant are must-haves.
If you’re planning to apply for immigration into Canada using your business, you’ll also need an immigration lawyer before you make your purchase. They’ll be able to investigate and determine if the business will be able to suit your immigration needs.
How We Can Help with Buying a Business in Canada
Sadly, many immigrants end up buying businesses for immigration, that they aren’t interested in, aren’t good at, and won’t make any money from or with! Using our network of local contacts and our understanding of the business culture in Canada, we can help you find opportunities that fit you and your immigration goals.
Our team will research and identify the best business to suit your needs. We’ll scour the business’s paperwork and make sure the business is legitimate and profitable, all while ensuring that it will support your immigration needs. Finally, we’ll follow through with the purchase transaction for you.
Sobirovs Law Firm specializes in helping foreign business people to relocate to Canada. You can focus on your business while we focus on your permanent residence and ultimately your citizenship in Canada.
To start the process today, reach out to our team.