Selling a Business in Canada's Largest City

Many business owners looking to list a business for sale in Toronto deal with somewhat of a paradox. The city of Toronto, Ontario is a bustling metropolis, filled with opportunity and it attracts numerous immigrant investors every year. Yet some owners looking to sell a business state that they have trouble selling their small businesses in Toronto - Canada’s largest city. This article will explore some of the reasons why company owners may list a business for sale in Toronto and have trouble finding a buyer.

There are consequences to not dealing with a professional

Listing a business for sale in Toronto is an entirely different process than selling a piece of real estate. Yet, some business owners looking to sell still choose to deal with salespeople that sell real estate. The consequences can be that the business sales process goes awry and business for sale don’t attract the right Toronto buyers and the companies languish on the market. If you are looking to sell your company (especially in a city as competitive as Toronto) then choose to deal with the professional that can properly assist you.

The business for sale is not priced properly

If you are looking to sell a small business, it is critical that you go to market with it being properly priced. This is especially true if you’re in Toronto. Selling a business in Toronto is not an easy task. True, there are many immigrant investors that are attracted to the GTA and there are plenty of buyers – but there are plenty of sellers too. Finding the right buyer for your business for sale Toronto is difficult enough so don’t make the take even more difficult by overpricing the business. Owners that list their business too high generally don’t attract as many buyers as they could and the business gets ‘market stale’. If you want to sell your business and attract qualified buyers from around the city, work with a professional that can assist you in the business sales process.

Please, report all your earnings!

Many small business owners in Toronto make the common (and highly unadvisable) mistake of not claiming some or all of their cash earnings from their companies. There are many businesses for sale in Toronto where the owners have done this and believe that they have ‘saved’. Besides this being a very big ‘no-no’ from CCRA, there is another cost involved to the small business seller. Generally, small businesses are valued based on a multiple of earnings. If ‘cash’ earnings of a small business are not reported then the business valuation is then that much smaller. So, if a business owner believes he or she is saving in income taxes avoided, the truth is that they’ve made their business valuation that much tougher to justify. As well, business buyers generally get a big ‘red flag’ when they encounter a business for sale that has an undeclared ‘cash’ component to it. They are much more difficult to get financing for (if at all). Honesty truly is the best policy.

Perhaps Toronto buyers are willing… but are they able?

Often, a potential business buyer will embark on a search for a business for sale in Toronto without the right forethought into the process… and what type of business they would like to own. For instance, there are many restaurants, laundromats, gas stations and retail establishments for sale and a potential pool of buyers for these types of businesses. The trouble is, are these potential buyers truly ready to own a dry cleaner or a printing shop? To paraphrase an old saying, "the will is there, but not the skill". This is a common occurrence in Toronto where a large group of new investors and business buyers want to "go into business" but truly aren’t prepared for the challenges this involved. The point is, if you want to sell your Toronto business it is important to properly qualify the buyer. Most people believe that this is merely a financial exercise but a professional business brokers will tell you otherwise.