Andrew Cagnetta, CEO of Transworld Business Advisors offers some sound advice on buying a business.
Here’s 7 vital questions you should ask sellers that can provide valuable information about the business and whether or not it is right for you.
1. Ask them to tell you about the business from their perspective. This gives you the opportunity to find out their leadership style, what they deemed successful and unsuccessful.
2. Ask them why they are selling the business now. Find out what their true reasons are for selling. It could be for personal issues, or it could be because of something the company is currently facing.
3. Ask them about the industry and its specific characteristics. This is your opportunity figure out your strategy and also whether or not you would enjoy working in the specific industry.
4. Ask if you can review the business documentation. Carefully review all of the company’s financials and other documentation. Dis the owner keep accurate records. This is a good way to assess whether the company was successful or not.
5. Ask how they would change thing s if they had unlimited resources. The company may have untapped potential in a hot market, but the owner may not have had the resources to take advantage of this. This question can reveal that the company can take advantage of once you become owner.
6. Ask them how many hours a week they usually work. The company may or may not be a good fit for you, depending on how much free time you want for yourself. Some businesses require spending long hours away from home.
7. Ask them how often they get called when they aren’t working. This is where you find out if the business requires a lot of your attention and involvement on a day-to-day basis. Some businesses may be extremely demanding while others can be easily managed with a much lighter commitment.
As always, conduct a thorough due diligence on the business before you make any big decisions. You can learn more about buying a business in BizBuySell’s Guide to Buying a Small Business, which you can download for free.