What to Ask the Sellers Before Buying Their Business
“Sometimes all you have to do is ask, and it can lead to all your dreams coming true.” – Randy Pausch, American professor of computer science
Are you thinking about buying an existing business? That’s fantastic! Now all you need to do is sign on the dotted line, right? Well, not quite. Let’s back up a few steps.
Finding the right business for you is about asking all the right questions. Do you know what questions to ask the seller before agreeing to buy their business? If your mind is running a thousand miles an hour trying to come up with some great questions that will ensure your success, relax. Here’s a cheat sheet to help you put your mind at ease on your future transaction.
You’ll want to ask the seller:
- What are your biggest challenges? You never know what someone will tell you. They may say, “well, we need to make x-amount of capital improvements in the next year.” That’s an important piece of information especially when negotiating asking price!
- What would you have done differently? Asking the seller what he would have done differently may open your eyes to new opportunities once you own the business. These may be avenues the current owner dismissed for cause or was unable to pursue for some other reason. Once you own the business you could bring these ideas to fruition. Learning from others mistakes, or roads not taken can be very beneficial.
- If you can’t sell, what will you do instead? Your bargaining power may increase by learning the owner will close his doors in six months if he can’t sell. You never know, unless you ask.
- How well documented are the procedures of the business? While you may not keep the day-to-day activities flowing the same way the previous owner did, getting some direction from the existing owner on company policies and practices is always helpful.
- How much does your business depend on a key customer? A successful business may not be a good risk if all of its business comes from a small handful of people or companies. The relationships that the owner has with his clients and vendors are something you should explore.
- What skills or qualities do I need to run this business effectively? While you probably have an idea of what it takes to manage cash flow, the importance of having trained staff and other standard business practices, each business is unique. Determining which skills or leadership qualities are most important to keep this particular business running will help you learn if your own skill set is matched, or in line with how you want to be spending your time!
Asking important questions like these when buying a business is critical to your success as a business owner. Having a Florida Business Broker on your side that knows what to ask, when to ask it, and how to ask is even more important.
Cress V. Diglio, Florida Business Broker
Whether you are looking to buy a business, sell your business or merge with another business, Florida Business Broker Cress V. Diglio has the experience to assist you in all facets of the transaction. Call Cress today for complete transaction support and expertise, 407-583-4486, or visit https://floridacertifiedbusinessbroker.com.