The beginning/first quarter of the year is the best time to buy your business. Buying a business gives you an easy way to get into entrepreneurship and make more money for yourself. Before you get excited, there are many due diligences that you need to do, and most importantly, you need to ask questions.
The questions you ask should give you insight into the business you want to buy. Questions should focus on finances, operations, staff, customer base, product line or service, and business growth plans.
The information you get from asking these questions will help you see if your business aligns with future plans and financial capabilities.
This article provides the benefits of buying a business and the questions you need to ask when purchasing.
Benefits of buying a business
Below are some of the benefits of buying an existing business.
Business has proven concepts
An existing, successful business means that the concept works. Make sure the company you want to buy has consistent revenue and profitability. A business that presents these two factors has a strong customer base, profitable, and that's what you want.
I have an existing employee
Buying an existing business means you don't have to worry about finding and training new staff. Current employees are well trained, providing important information on how the business works, making it a more seamless transition.
Established customer base
Buying a business saves you the hassle of finding customers. The company's loyal customer base will hope that the business will continue to succeed. This is your advantage.
Equipment, raw materials and products
It usually includes business transactions, real estate, furniture and equipment. Buying an existing business will save you a lot of money on equipment, raw materials, and more.
Gives entrepreneurs freedom
Buying a business gives you the solid foundation you need to implement creative ideas. When researching your business, make sure the model is flexible and fits your ideas. This kind of freedom is also seen when starting your own business, but the risk of an established business is reduced.
Questions to ask when purchasing a business
Now that you know all the lovely things that come with buying a business, you can start working on a real job. The following questions serve as guidelines for questions that you need to ask during the purchasing process.
1. Why is the business on sale?
Asking this question gives you insight into the current state of the business and why owners want to sell it. Understanding the motivation behind a sales is important in determining whether your business aligns with goals and values.
If your business is on sale for negative reasons such as economic struggles, business model failures, regulations, or legal issues, you need to do due diligence and determine whether it is still suitable for you.
2. How was the asking price determined?
The asking price for a business tells us a lot about its value and growth potential. You should ask the owner how they determined the asking price and who conducted the business evaluation.
Additionally, you can do your own research by examining how abundant prices are for similar businesses. This will help you better understand the market value of your business and negotiate a better, fair price.
3. What are your important assets? And do they have an employment purchase agreement?
Business assets are owned by the business. This includes equipment, inventory, intellectual property and real estate. You need to ask about these assets, understand their status and get a better grasp of the company's financial position.
Additionally, if the assets are purchased, you should be able to verify your financial capabilities.
4. What are your main revenue streams and profit margins?
Understanding the main sources of your business is important for assessing your growth potential. You should ask the owner about the profit margins and how to generate income for your business. A comprehensive assessment and understanding of these aspects can help you measure your business's chances of success and find areas of improvement.
5. What is your current customer base and what keeps them faithful?
You need to find out what your customer base looks like and why they are loyal to your business and brand. Ask your current owner about your target audience and all the demographic information they have.
Plus, you need to find something that will set your business apart from its competition. This gives you even more insight into why customers are coming back.
6.Do your business have legal or compliance issues?
Every industry has its own laws and regulations that need to be followed. It's very important that you not only understand the regulatory environment in the industry in which your business resides, but also know how your business follows.
Compliance is extremely important and if your potential new business is not compliant, you should understand the risks before you buy.
7. Does your business have an online presence?
It's 2025 and everything is technical. That means business too. A good business to buy is one that has a decent online presence, such as social media pages, websites and other online sources.
If the business you are purchasing is not online, you need to move towards a more digital approach. This can be time and expensive, so make sure you have the time and money to spare.
8. What is the owner's exit strategy?
You should ask the current owner about your exit strategy. This is essential as exit strategies can affect your purchasing decision. Some owners are considering retiring from other ventures or moving to other ventures, while others want to maintain some kind of ability.
Understanding the current owner's intent will help you develop a better purchasing strategy and let you know if your owner can use it for a smoother transition.
9. Who are your key employees?
Once you buy a business, you need to know who will work with you. Ask your current owner about the key personnel that play a key role in the daily business operations. Knowing their roles, responsibilities and time in the company will help you see who you want to protect and where new staff are needed.
You can use these questions to get a really good image of the business you are about to buy. If your business checks all the boxes you want, you can proceed with your purchase. If you are hesitant, you will need to reconsider your purchase or find another business to buy.
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