Take it to the Bank: Buying and Selling a Business

Some of the first questions potential buyers ask a business brokerage specialist are: “How much is it?” “How much can I make?” And then, “How much money do I need to buy it?” Many sellers expect, or at least want, an all-cash sale. Interestingly, when asked if they paid cash when they purchased the business, most respond with a “no”. Most business sales are financed either by an outside source, by the seller or most often both. ‘Seller Financing’ also known as ‘Vendor Take Back’ has several pluses:

1. There is a better chance the business will sell.

2. Sellers usually receive a much higher price when willing to finance a portion of the sale.

3. Interest realized from a seller-financed note can substantially increase the total paid for the business.

4. Seller financing may provide a higher rate of return than conventional investing.

5. Positive tax consequences are, in some cases, another benefit of seller financing.

6. Financing the seller tells the buyer—and the bank—that a seller has sufficient confidence in the business.

7. Without vendor take back, many banks will not agree to finance, or will fund only a fraction of what they would otherwise.

Other than needing the cash to purchase another business, the biggest obstacle to seller financing is the seller’s concern that the new owner can pay off the loan from the profits of the business. Some sellers check the buyer’s work history, obtain personal references and a credit report. Creative financing can also be helpful. Example: a toy store does 40 percent of its business in October, November and December. Make financing payments higher in those months and lower in the summer. Seller financing or vendor take back has been the mainstay for many successful business sales.

How the sale is structured is important to the best deal for the buyer and seller. A professional business broker can be the key player in accomplishing this goal. Business brokers can’t provide legal advice, but their deal-making knowledge and experience can greatly assist in ensuring a win-win transaction.

If you are interested in exploring business opportunities or are contemplating the sale of your business, feel free to contact our office.

How To Grow Your Business Through Franchising

Do you think your business is unique? Have you considered replication through franchising? Do you have the necessary skills to use franchising as an expansion strategy? While it’s not the right strategy for everyone, for some companies the explosive potential that franchising affords is unparalleled in the world of business growth. Franchising has many attractive features, particularly when compared with more traditional methods of expansion such as opening more outlets on your own. Typically referred to as company stores, you own and operate these locations yourself. You provide the entire investment for the startup, and while you earn all the income, you are also responsible for the expenses. That’s why more and more entrepreneurs are choosing franchising as the best way to expand a great business quickly with minimal capital and risk. Here are a few reasons why:

• Franchise owners are highly motivated operators
• Franchisees assume the risk of succeeding or failing
• Franchises can open quickly, gaining an edge on the competition
• Franchisees are responsible for all hiring, leases, and unit-opening expenses, reducing your risk
• Franchisees are easily attracted because buying into a proven concept minimizes their risk

Is your business "Franchisable"? Before making the decision to franchise, you must first determine whether franchising is a viable strategy for your particular business.

BC Business Brokers, an affiliate of Sunbelt, can help you analyze your business and perhaps, take it to the next level. If you are contemplating the sale or expansion of your business and would like to discuss your options, contact our Nanaimo office at 1-877-289-0969 – we can help you. Feel free to visit our local website at http://www.bcbusinessbroker.ca/ or www.sunbeltnetwork.com/vancouverisland.





What is Sunbelt?

Company Overview

Sunbelt is the largest business brokerage firm in the world, making it the dominant force in the industry. Since 1978, the Company has evolved into a business brokerage network including 300 offices throughout the United States and 30 foreign countries. We currently broker the sale of approximately 4,000 businesses each year.

Our 1,400 business brokerage professionals are dedicated to providing our buyers and sellers with superior service throughout the entire buying or selling process. Sunbelt's experienced methods make the transition smooth and uncomplicated.

Sunbelt business brokerage offices can help those buying or selling a business in any of the four areas of the private business market:


Main Street Businesses

General businesses that usually have gross sales of $1,000,000 or less per year and have 20 or fewer employees (95% of US businesses fall into this category).
Franchise Sales Sunbelt is pleased to be the business brokerage firm that represents a select group of franchisors with a proven track record of success in their field. When you buy a franchise, you are in business for yourself, but not by yourself. These franchisors have proven business systems and known names in their respective markets.


Franchise Resales
Thousands of existing franchise businesses resell every year, often for "human driven" reasons: the owner retires, dies, is in poor health, is getting a divorce, is relocating or experiences other life-changing circumstances। We, as a business brokerage, always want to know why someone is selling a business, and so do you. Depending on the circumstances, the sale of an existing franchise may present a good business opportunity for the buyer. An existing franchise has the advantage of being an existing business plus the ongoing support provided by the franchisor. Those looking to buy a franchise can benefit from the professional assistance provided at Sunbelt.

Middle Market

Sunbelt is a market leader in managing middle market transactions in the range of $3,000,000 - $30,000,000.