10 Questions Buyers Should Ask Before Buying a Business
Having been involved in a large number of business transactions over the years means we’re been there during the many buyer and seller meetings. By guiding the two parties through what we call ‘the dating game’, we are able to make their interactions more efficient. While many buyers come to us prepared and have many questions regarding the business they are interested in purchasing, others find themselves stumped upon the first meeting and time passes without them achieving anything significant. For this reason, we’ve put together a list of 10 questions buyers should obtain the answer to before making any major purchase decisions:
What role does the owner play in the business? What are his/her day-to-day duties?
How many hours a week does the business owner work in the business? When was the last time the owner took a vacation?
Does the business have written contracts with their suppliers and their customers?
Are the customers able to separate the business from its owner? How dependent is the business on its owner?
How reliant is the business upon key suppliers or customers?
How long have the employees been working for the business?
What have been the most effective ways of marketing to your target audience?
What areas of the business are systemized?
What are some of the biggest challenges the owner has faced in recent years? How did he/she overcome these challenges?
If the owner were to continue running the business, what opportunities would he/she consider in order to grow their business?
Having these questions in mind ensures you will be able to have a more productive conversation with the seller, will allow you to obtain vital information regarding the business, and may help you plan your next steps – whether to proceed or look elsewhere. Before meeting the seller, make sure to plan out your conversation in advance or you may end up leaving the meeting more uncertain than ever.