More Questions to Ask when Buying a Business

If you plan to buy a business you can never ask too many questions. If the answer doesn’t make sense, ask a clarifying question. If it is still not making sense its either time to move on and look for another opportunity or sit down with seller and make sure they are clear on what you are asking and why.

Questions to ask when buying a business

So far there are two articles in this series and this is the third. In the first article called “Questions to ask when buying a business,” I looked at the most important question of all to you as a buyer of a business; “Do you really want to buy a business?” In that same article I then offered ten questions that you as the buyer of a business could ask the seller.

More questions to ask when buying a business

In the second article called “Questions to ask a business seller,” I looked at 12 questions that you could ask the seller of a business.

In this third article, here are a series of 10 questions to add to your list of questions as the buyer of a business you should consider asking the seller of a business.

Tell me about the revenue your business generates? Is it just for products or just for services or a combination of both? Is your revenue consistent on a month to month basis or do you have ups and downs due to different seasons for your products and services? Does one product or service make up more than 10% of your gross revenue?
What are your top five expenses? Are they typical for a business with your size of revenue and expenses? What strategies do you have in place to manage your expenses including your top five?
Do you manage the accounting you use for your business by in-house employees or do you outsource this to a third party? If your business receives cash, do you have policy in place with how the employees receive and handle cash?
How handles the daily responsibility of banking and reconciling bank statements? Is it the same person in the office or do you use different people?
Do you use any outsourced service providers? If so, why and why did you choose the companies that you use?
Does your business have inventory? Is this included in the purchase price? How often do you turn your inventory? When was the last time you did an inventory count? Do you count the inventory yourself or hire a third party to do this for you?
How do you promote and market the business? Do you have a website? Do you have any sales and marketing material I can see? Do you have employees that specialize in sales and marketing or do you outsource this to a third party? How much per month or per annum do you spend? How do you measure its effectiveness?
What legal contracts do you have in place? Can they be cancelled or will I need to take over those contracts?
Do you have a HR or Human Resources department? Do you have an employee handbook? Did you put this together yourself or have an attorney provide this for you? When was the last time you had the employee handbook reviewed? Do you require the employees to sign a written document they have received a copy of the employee manual?
When you need to hire new employees, how do you find them? Have you had any lawsuits from previous employees? Do you have any lawsuits you are managing at the moment?

There is no question that buying a business is tough. I read recently that according to … 400,000 entrepreneurs are starting a new business in 2015.

Think about that for a minute. Over 400,000 new businesses are starting in 2015. This is only new businesses getting up and running. This doesn’t include business buyers that are buying an existing business.

Not everyone is cut out to be a business owner. It’s hard work and demanding but so is anything you wish to achieve in life.

If you would like more information about buying a business please visit my webpage Buy a business or buy a copy of my book Successfully buy your business.

For more immediate help with buying a business you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.

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