For many people, deciding to buy a business and deciding what kind of business to buy are related. However, my advice to anyone buying a business is to look at all options available, before deciding to purchase a certain kind of business.
At VR Business Sales in Edmonton, we receive hundreds of inquiries each month from prospective business buyers who often have the desire to buy a business, but struggle with what type of business to buy. As a result they tend to spend too much time “kicking tires,” trying to figure out what is best for them.
Below are a couple of common examples of businesses that are frequently bought and sold, and that people consider.
The Gas Station:
The longest standing business all North Americans use and love - the corner gas station! A gas station is a great business. Everyone in my family and your family uses it to buy gas, maybe a pack of cigarettes, lottery tickets or milk, etc. There are often many gas stations for sale close to your location. However, you need to know there are two kinds of gas stations; the franchise gas station or the independent retailer. There are pros and cons to each. If you buy a franchise gas station, you get the name brand recognition and the traffic associated with it, but you will need to purchase expensive gasoline from a particular oil company. However, when you purchase from a big oil company, you will not have to worry about environmental issues.
With an independent gas station, you can sign contracts with any gasoline supplier, but you run the risk of more exposure to environmental issues. Also, the marketing support provided by large oil companies is guaranteed to be very helpful if you are new to the gas station business.
When looking to purchase a gas station - keep both options in mind, along with their pros and cons. Regardless of which option you choose, the decision to buy a gas station is a good one.
Buying a restaurant is a slightly more risky than buying a gas station. Gasoline for the most part is a commodity, without much product differentiation and buying gas is a necessity.
When thinking about buying a restaurant there are countless options. The first step in choosing a restaurant to purchase is identifying a restaurant that you like -- the type of food being served, the ambiance, the location, the prices etc. Certainly you can change most of these variables except the location. However, if you purchase a restaurant, I would recommend purchasing only if you absolutely love the restaurant as it stands.
Whether you decide to buy a gas station or a restaurant, it is critical that you go through the recommended steps before buying any business. You need to evaluate the financials and determine the value and suitability to your operational experience amongst other various factors.
In the VR Business Sales office, we have an 88 point checklist for a buyer to review as part of their due diligence when they buy a business. This is an important step in your life and often times most people buy a business only once in their lifetime and it is important that you have the right professionals helping you throughout the process.