When many entrepreneurs imagine their first business, it’s often a vision that’s been carefully crafted over many years of daydreaming. That said, building a business from the ground up comes with a lot of risk and logistics. Buying an existing independent business allows you to hit the ground running and slowly shape the brand and operations into your vision over time.  

Here’s a brief road map of what you can expect when buying your first business. 

Not sure if buying a business is the right move? Check out Buying an Existing Business vs Starting From Scratch. 

Choosing a Path

If you’re interested in buying a business, there are two primary ownership models you’ll need to consider. Buying an independent business, or buying a franchise. Both paths have their pros and cons and choosing the right model for you comes down to your unique vision for the future.

One of the primary advantages of buying an existing business is the expedited start-up process. With key elements such as location, inventory, and attracting customers already covered, buying an existing business allows you to get a head start on your entrepreneurial career with fewer risks. 

On the other hand, in some cases, buying a franchise can involve even less risk than buying an independent business. While you won’t have the ability to craft or modify your business to your exact vision, the built-in brand recognition, and vast resources provided by franchisors make the route an appealing entry into the world of small business. 

Professional Support 

Once you know what kind of business you would like to buy, it’s time to get professional support before you can break into the market. Not only can they help you find a business to buy, but a commercial real estate agent will also collect and analyze essential details from both the selling business’s daily and long-term operations.

As your professional advocate, they’ll keep you completely informed on critical details like assets, leasing agreements and zoning bylaws. From the beginning of your business search to closing the deal, they ensure your long-term interests are protected. 

Beyond helping you with the transactional elements of your first business purchase, your commercial agent can connect you with other industry professionals to ensure your entrepreneurial journey gets off to a great start. These connections include financial experts, real estate investors, hospitality consultants, designers, contractors and real estate lawyers. 

Want to learn more about working with a commercial real estate agent in Ontario? Explore our business buying approach here. 

Finding a Business 

Once you’ve chosen a commercial real estate agent to work with, it’s time to enter the market and find your business. As you may expect, buying a business is far more complex than simply buying property or assets.

You’ll first need to create a strategic buying plan to determine what kind of business you would like to buy, where you want to buy and what your budget is. After establishing these key details, your commercial agent will begin introducing you to business listings that fit your vision. 

During this process, your agent will leverage their industry network to source off-market listings that meet the criteria outlined in your buying plan. Next, they’ll analyze available MLS listings to help you consider other suitable businesses to purchase. 

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Letter of Intent 

After finding the business you wish to buy you’ll need to draft a Letter of Intent (LOI). The LOI will outline the key elements of your offer and be a helpful structure during the negotiation process. An LOI typically includes but is not limited to. 

• A purchase price range
• Seller’s conditions (such as providing critical documents and business records)
• Terms of confidentiality and communication
• A timeframe for negotiation exclusivity 

Final Research 

After submitting a letter of intent, you’ll have the opportunity to carefully review and research the business in great detail. This is an extremely important step and you’ll want to do your due diligence in examining key elements related to the business. Along with a complete overview of the business’s legal and financial standings, items such as existing suppliers, locational considerations, current staff members, unions, and IT and communication infrastructure should all be considered. Your commercial real estate agent can help you ensure no stone is left unturned during this stage. 

Making an Offer

After you’ve completed your research and are ready to complete your first business purchase, it’s time to submit a formal offer. Your agent will help you craft a compelling offer based on your in-depth review of the business, a market valuation of the business, and earnings (EBITDA). 

Thinking about buying a business? We can help you execute your vision. Give us a call.