Choosing to start a business in Prince Edward Island is no small undertaking. You know it will involve long hours and uncertain profit margins, especially at first.
If you are struggling to take the plunge and actually put your business idea into action, perhaps the thought of trying to start a business from scratch is too daunting.
If so, you have another option – purchasing an existing business for sale in PEI. Assuming control of a business that already has a bit of a track record and loyal customers takes some of the unknown out of the process of becoming an entrepreneur.
Not everyone who sells a business does so because the business is failing. Some people are simply retiring or are ready to move to a new professional challenge.
You have quite a bit of help available in Prince Edward Island for finding and purchasing existing businesses. We will highlight some of the items you should pay attention to when looking for the best business to buy in PEI.
Why Buy a Business vs. Starting a New One in Prince Edward Island
Starting a business can be a highly satisfying endeavor. However, so can buying and growing a business that someone else started. Here are some pros and cons of buying an existing business in PEI.
- Pros for Buying an Existing Business in PEI
- Up and running faster: It can take several weeks or even longer to go through all the steps required to start a business from scratch. When you buy an existing business, you can be operating the business far faster because someone else did the initial legwork.
- Gain a head start: Rather than having to seek customers and employees from ground zero, you should have some customers and employees in place when you buy a business that’s already up and running.
- Easier to obtain loans: A traditional bank is more likely to give you a business loan if you are buying a business that has a track record. Often, this type of business loan is less risky for the bank than giving a loan to a business starting from nothing.
- Better for novices: If you have no experience in business, having a business that’s already in operation leaves fewer steps where you could make a mistake versus starting from scratch. Learning as you go is easier when you have veteran employees to lean on, too.
- Cons for Buying an Existing Business in PEI
- Issues may exist: Even if the business’ financials look great when you buy the business, you may inherit some unwanted issues, like a bad reputation on social media or employees who are disgruntled. The business’ financial books don’t always tell the whole story.
- May inherit poor deals: You have to live with some of the decisions the previous owner made. Perhaps the owner gave a friend a great deal on a contract for purchased products, cutting profit margins on the sale to near 0%, leaving you to honor that lousy contract.
- May not qualify for some grants: Although PEI offers numerous business grants, you may have difficulty obtaining some of them when you have a business that’s been up and running for a few years. Some grants are for startup businesses only.
- Pros for Starting a New Business in PEI
- You are the boss: When you start a Prince Edward Island business, you make all the decisions – good or bad – and you can serve as your own boss. This is a highly appealing aspect of starting a business.
- Avoid inheriting problems: When you buy a business, you may inherit some major issues that the previous owner caused. You have a clean slate with a new business. (We’re not saying you won’t potentially create your own problems when you start a new business, but at least they’ll be your problems.)
- Take advantage of all your skills: Many people start a PEI business to allow them to showcase certain skills. But if you have skills in many other areas, too, such as with marketing or with accounting, you can take advantage of your variety of skills when you are the boss and owner.
- Find your best location: Take your time in finding the perfect location when starting your new business. If you purchase someone else’s business, you’re probably going to be stuck with that person’s decision on location for the business for a while.
- Cons for Starting a New Business in PEI
- Challenging process: When starting your own business from scratch in Prince Edward Island, you may have to spend long hours preparing for your first day with customers. You may have to perform a lot of different tasks, too, creating a significant challenge.
- Finding good help: Finding the right people to give you advice on the business setup process – like attorneys and accountants and trustworthy employees – can be very challenging. Ask other entrepreneurs for advice, if possible.
- Financial unknowns: When starting a new business, you have no guarantees of success – or even of making a single sale. When you buy an existing business, you have some financial results you can fall back on and expect to receive, creating a little less uncertainty regarding the financials.
Where Can I Find Businesses for Sale in PEI?
If you want to find the perfect business to buy in PEI, you might be surprised to learn that quite a few resources are available to you.
- Making Use of Business Brokers Serving Prince Edward Island
A business broker is someone who has a close eye on the business market in Prince Edward Island. The broker knows about businesses for sale – sometimes before they even officially come on the market – and can help you find the perfect option.
If you are seeking a business in a certain niche or in a particular location, a trusted business broker can help you track down businesses for sale in PEI that fit your specific criteria. The broker also can actively watch for businesses that meet your needs, giving you a heads up immediately when they are going to become available for sale.
If you decide to purchase a business in PEI, you may have to go through a negotiation phase before you can take control. The business broker can make this process run more smoothly, helping to find compromise on key issues.
Strong business brokers who serve the Prince Edward Island province include:
- Making Use of Online Business Marketplaces Serving Prince Edward Island
You can see a list of businesses for sale in Prince Edward Island through online marketplaces. Such websites provide a wide mixture of types of businesses. Those looking to buy a business may have success using these sites to gain a feel for what types of businesses are for sale and what those businesses may cost.
- Making Use of Real Estate Brokerages Serving Prince Edward Island
If you are interested in finding commercial properties as well as businesses for sale, a real estate brokerage can be a good resource. Real estate brokerages may focus a bit more on residential property than business property, though.
- Making Use of For Sale By Owner Online Classified Ad Websites Serving Prince Edward Island
Business owners, especially those with small businesses, may try to sell their businesses themselves. This can save them some money versus paying commission to a real estate agent. in Prince Edward Island, some of these online classified websites include:
Tips for Buying a Business in Prince Edward Island – and Common Mistakes You Should Avoid
- 10 Tips for Buying a Business in Prince Edward Island
- Make sure you’re ready: You might believe you’re prepared to become an entrepreneur, but some reassurance is never a bad idea. The PEI provincial government has some resources to help you determine your preparedness.
- Formulate a plan: Even when buying a business, it’s a good idea to have a business plan for how you believe the business should perform and for what steps you expect to take as the new owner.
- Research the market: The provincial government provides advice for entrepreneurs looking to buy or sell a business in Prince Edward Island. After you create a profile on the website, you can view the information and gain some valuable insight.
- Seek advice from peers: Find other entrepreneurs already operating a business in PEI and seek their advice. Organizations like the Greater Charlottetown Area Chamber of Commerce and the PEI Business Federation can help you find peers.
- Trust the professionals: Be honest with yourself about when you need some help – and then seek out qualified professionals. Business brokers, lawyers, bankers, and accountants can help you determine whether the business that is for sale is a good value and whether its legal and financial obligations are in order.
- Determine the appropriate value: Don’t just take the previous owner’s estimation of the value of the business. You need to perform your own evaluation of the value of the business, often with the help of pros.
- Figure out what assets are included: A business sale can involve quite a few items beyond the building and any products the company is selling. Appropriately valuing inventory and assets the company owns is important when settling on a purchase price.
- Determine the business’ reputation: Check with the Prince Edward Island BBB to see if the business has complaints before you buy it. Additionally, check customer reviews and social media comments to see how customers view the reputation of the business.
- Keep the owner involved: Most owners who are selling a business want you to have success. Consequently, they may be willing to work alongside you in the first few weeks or months to make the transition smoother.
- Be patient: The steps for buying a business rarely go according to plan. Be ready for twists and turns in the process. Have some patience as well. Rather than jumping at the first opportunity, be patient and hold out for a business that fits your needs and skills well.
- 4 Mistakes to Avoid When Buying a Business in Prince Edward Island
- Not considering the future: Understandably, many people focus on the present when looking to buy a business. However, you also should try to project what the business will look like a few years and longer into the future. If an expected technological advancement may render the business unnecessary in five years, your offer price should reflect that.
- Not putting things in writing: Be wary of anyone selling a business who doesn’t want to provide proof of finances or who doesn’t want to sign agreements regarding the purchase. Insist on having everything in writing and on having your attorney review it.
- Not considering immediate investment requirements: When you buy a business, you (obviously) have to come up with the money for the purchase price. However, you may have some immediate expenses as well. Maybe the business’ delivery truck needs several thousands of dollars of repairs. Take these expenses into account when negotiating the purchase price.
- Not trusting current employees: Although it may be tempting to bring in your own employees soon after buying the business, give the current employees a chance. Some of them probably know the business’ operations well, and they may have ideas to improve it that the previous owner ignored. It’s hard to replicate the knowledge that these employees often have.
