How to Buy a Business in Canada for Immigration and Profit
This article discusses three tactics that will assist you in locating, negotiating, and purchasing a Canadian firm at an affordable price. When purchasing a business in Canada for profit and immigration, be prepared to explain the following to immigration officers:
1
Your background and how is it relevant to your intended business
2
How do you intend to grow this business?
3
What is your hiring plan for this business?
4
Do you have sufficient capital to invest for business improvements (in addition to purchase price)?
5
Is your business likely to be viable and generate sufficient revenue to cover all the costs and pay employees?
6
What would be benefits to Canada from your business activities?
Use one of the three options outlined below to acquire the best Canadian business for your personal, financial, and immigration objectives.
Strategy 1: Acquire a Profitable Enterprise
Priority should be given to purchasing a profitable firm in your selected industry when searching for a business to purchase in Canada. Profitable firms are often those that have been in existence for more than five years, have loyal customers, are system-driven, have the highest levels of staff engagement and retention, and earn consistent net profits for their owners.
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Challenge:
It is typically difficult to identify very lucrative firms for sale in Canada because few business owners are prepared to part with their revenue-generating companies.
Moreover, such firms are typically pricey. Typically, the price of a company is calculated by the following formula: Price=5 x EBITA (earnings before interest, tax and amortization). Therefore, a business with an annual net income of $100,000 would cost around $500,000 to acquire (5 x $100,000).
If you have the financial means to acquire a very profitable firm, you should devote all of your efforts to locating a company that fulfills your requirements.
If your budget is insufficient to purchase a very profitable business in Canada or a moderately profitable firm that fulfills your income expectations, you should focus on locating a low-priced business that you understand and are enthusiastic about.
Follow the guidelines in Strategy 2 to identify a firm that meets your budget and can help you achieve your financial and immigration objectives.
Strategy 2: Buy a Destitute Business
If you lack the funds to purchase a profitable firm in Canada or do not intend to invest huge sums of money up front, you can purchase a struggling business and commit to its improvement. Do not purchase a business that generates revenues of less than $30,000 for the owner!
There are numerous struggling businesses for sale in Canada, and the key is to ensure that you are not taking on too much risk by purchasing one.
- Businesses that are struggling nearly usually require further capital investments and operational upgrades from their new owners.
When purchasing a decrepit business, you must have a good improvement strategy and additional funds to fund the plan. Additionally, you must convince immigration officers that business have a good growth strategy and will be able to implement it.
If you have the appropriate expertise, additional resources, and a clear vision of how to scale your newly acquired business, then you are in a position to acquire a failing business for immigration and personal reasons. If not, see below for alternatives.
Turning around a failing business can be a difficult task, particularly if you lack industry understanding and entrepreneurial experience.
You can overcome this by collaborating with professionals who can assist you in enhancing the success of your firm, or by implementing Strategy 3 to purchase a franchise in Canada.
Strategy 3: Buy a Franchise
If you lack the requisite skills and experience to purchase a struggling firm, you should consider purchasing a franchise so you can benefit from the franchisor’s experience and support.
There are numerous smaller franchises that may be acquired for $80,000 – $250,000 and generate at least $50,000 (per year) in revenue, although many well-established businesses may demand an initial investment of $500,000 or more.
Depending on your budget and the level of risk you are willing to assume, you have the option of purchasing an established or a new franchise site.
Keep in mind that franchisors typically charge royalty fees ranging from 5 to 20 percent of total income, based on the level of support they provide, and this may have an impact on your profitability.
In addition, franchisors will restrict your entrepreneurial independence and you will have few options to improve business operations or establish additional revenue streams without the franchisor’s prior approval.
Franchises are not suitable for everyone.
If you are a savvy entrepreneur who understands how to establish, grow, and scale enterprises, you may be better off choosing a non-franchised firm.
If you desire turnkey solutions and do not mind restricting your entrepreneurial independence, you should seek out thriving franchises that offer flexibility, marketing support, and strong brand loyalty.
We recommend employing a franchise broker to find the best opportunity for you.
Need Advice on What Business to Buy? message to Our Lawyers!
If you want to buy a business for immigration and profit, consider having a Strategy Call with our business immigration attorneys to discuss your goals in greater depth and strategize on which business is best for you and how to achieve permanent residency in Canada as a business owner.
The first step towards moving to Canada is to get an assessment of your specific situation. Call us today at +1 613.222.7154 for an assessment to see if you are eligible to move to Canada, or fill out our online assessment form.
