When you are brainstorming ideas for opening a business in Nova Scotia, all your attention may be on starting a new business from scratch. After all, this seems like the logical step.
However, you do have another option in trying to open a business in Nova Scotia – you could purchase an existing business.
There are some pros and cons when purchasing a business that someone else started. It’s especially important to fully investigate any business you are considering buying. This is a major investment, and you don’t want to spend your money without thoroughly vetting the opportunity.
Fortunately, plenty of help exists when it comes to purchasing an existing business in Nova Scotia. We’ll explain some of these sources of help, as well as the options you have for buying an existing business.
Why Buy a Business in Nova Scotia? Pros & Cons of Buying a Business vs. Starting One from Scratch
Although it can be highly satisfying to start your own Nova Scotia business from scratch, this process also can be quite challenging and time consuming. Some people find it far easier to take over an existing business.
Taking the time to explore the pros and cons can help you make the best choice for your particular situation.
- Advantages of Buying an Existing Business in Nova Scotia
- Built-in customers: One of the hardest parts of starting a new business is attracting customers – and keeping them coming back. An established business that you buy should have loyal customers already in hand.
- Less time required: When someone else has done all the legwork required to start a new business, you don’t have to duplicate those efforts when you buy that business. You still have research to do about the business before you buy, which takes time, but you’ll save time overall.
- Faster time to open: A frustrating aspect for those starting a new business in Nova Scotia often is the vast amount of preparation work before you can actually open the business. Buying an existing business lets you start running the business much faster because you don’t have to do as much prep work.
- Franchise options: For some people, purchasing a franchise represents the best of both worlds. You open your own business, but you also have the backing of an established brand name behind you.
- Disadvantages of Buying an Existing Business in Nova Scotia
- Unrealistic financial records: Always be skeptical when an existing business claims extremely large sales figures but is being sold at a bargain price. We hate to be the bearer of bad news, but if the business’ financials are too good to be true, they probably aren’t true. Have an accountant and a lawyer verify the information before purchasing the business.
- Location limitations: When you buy an existing business, you are locked in to that existing location in Nova Scotia. You probably don’t want to relocate the business immediately, as you may lose your existing customers.
- Rules for franchisees: When you start a franchise in Nova Scotia, you must abide by any rules the franchise owner has. This may limit the location you can select (such as needing to be in Halifax), the advertising you can do, and the layout of your store.
- Advantages of Starting a New Business in Nova Scotia
- Full independence: When you start your own business, no one else tells you what location to use, what products or services to offer, or how to run things. You are your own boss, and you don’t have to deal with fallout from any decisions a previous owner made.
- A sense of pride: Starting a business from scratch gives you a sense of pride. It’s something you built from the start, and you own all your successes and failures. You even may create something that you can pass down to your heirs.
- Eligibility for startup grants: When you start a business, rather than purchasing a franchise or an existing company, you may be eligible to receive startup funding in the form of grants through Access Nova Scotia. You do not need to repay these funds.
- No legacy problems: When you start a business from scratch, rather than buying a business, you do not have to honor agreements the previous owner made. If the previous owner angered customers or failed to maintain the building, you inherit these issues when you buy the business. Starting anew means you don't have to deal with existing baggage.
- Disadvantages of Starting a New Business in Nova Scotia
- Long hours: When you start a business from scratch, you may not have any employees at first. This means you are responsible for everything, leading to long working hours.
- Rougher startup process: If you buy an existing business, you likely have existing customers, existing processes, and, potentially, employees who understand how things work. You can rely on these advantages while you get up to speed. With a new business, you don’t have this kind of help at the beginning, which could lead to mistakes.
- More risk: When you buy a business that is already operational, you have a history of past sales and income generation. This reduces your total risk. You hopefully can at least come close to matching the previous results, even if the business never grows. There’s no history to fall back on when starting a new business.
How to Find Businesses for Sale in Nova Scotia
Although finding a business for sale in Nova Scotia may seem daunting, you can make use of a number of resources to help you find the best business to purchase.
- Online Business Marketplaces in Nova Scotia
Online business marketplaces are web pages that list businesses for sale in Nova Scotia. These are a mixture of businesses and franchises represented by a broker, by a specialist in franchises, or by a real estate agent.
- Real Estate Brokerages in Nova Scotia
A real estate brokerage often will list businesses for sale alongside things like commercial properties and residential homes. The real estate brokerage doesn’t focus on businesses, but it should still have plenty of opportunities worth considering.
- Online Classifieds in Nova Scotia (For Sale By Owner)
When a business owner does not want to pay the fees associated with using a real estate agent or broker, the owner may use an online classifieds website that has minimal fees. You likely will find really small businesses in Nova Scotia in this manner.
Even though the business owner is trying to save fees, you still should take your own steps to protect your investment. Hire an account and an attorney to help you evaluate this type of business thoroughly.
- Business Brokers in Nova Scotia
When seeking to purchase a business in Nova Scotia, the best resource often is a business broker. This person focuses completely on businesses and franchises for sale, meaning you can receive information about businesses for sale quickly. You may even learn about an opportunity before it officially goes on the market.
After you tell them what type and size of business you want to buy, business brokers may actively search for businesses for sale for you. The broker can search throughout Nova Scotia or in a particular region or city in the province.
When it’s time for negotiation and the sale, the business broker can facilitate this process. Negotiations over the sale of a business can drag out, so it’s nice to have someone who keeps things moving along smoothly.
Some of the best business brokers in Nova Scotia include:
Tips for Buying a Business in Nova Scotia & Mistakes to Avoid
- 10 Tips for Buying a Nova Scotia Business
- Network with other business owners to learn about opportunities. Consider joining the Better Business Bureau of Nova Scotia or the Halifax Chamber of Commerce to find fellow entrepreneurs with whom you can network.
- Access Nova Scotia has advice to help you decide whether you want to buy a business in the province.
- Count on a business broker to help you find just the right business for you.
- The federal government has tips on helping you figure out the value of inventory and assets the business owns before you buy it.
- You may need to sign certain agreements to see the business financials during the negotiation phase. Always have an attorney look over agreements before you sign them.
- Understand how to appropriately value the existing business. An accountant or CPA can help you tremendously here.
- If the previous owner is open to help you by providing business advice for a couple of months, take advantage of this opportunity. Many business owners who are selling are proud of what they built, and they want to see you succeed, too.
- If possible, try to speak with a few of the business’ current customers. They may be able to give you valuable insight into the business you are considering purchasing.
- Be ready for the unexpected. Business purchase negotiations almost never go exactly like you think they will go. Be ready to adjust on the fly.
- Be patient! Buying a business involves numerous steps, and you need to have patience as the process plays out between you and the business owner.
- 5 Mistakes to Avoid When Buying a Nova Scotia Business
- Don’t just take the current business owner’s word about the business’ performance, especially financial performance. Have a CPA or accountant investigate everything before making a purchase.
- Don’t forget to seek legal advice regarding the purchase.
- Don’t be impatient about finding a business to buy. Take the time to make sure it is the right fit, rather than buying the first business that comes along.
- Don’t fail to thoroughly research a franchise before you buy it, including the amount of startup money you will need, any help the franchisor provides to you, and any specific rules you must follow.
- Don’t fail to negotiate holding back some of the purchase price amount, in case issues arise where you need to make a financial claim against the previous owner.
