After you’ve taken the initial step to buy a business, there are some essential questions that should always be asked. You should never rush into a decision, and you can make an informed choice by bringing these questions directly to the seller. The answers you receive will help you decide whether a business is really worth purchasing. Have a look below at the five questions you should always ask a seller.
Why are you selling the Business?
The first and most pertinent question to ask is one that allows you to evaluate the key reason for why the seller is choosing to sell. There can be many reasons why an owner would need to sell their business, and these include relocation, new opportunities, burnout, lifestyle change, negative industry trends or financial reasons. If an owner is simply moving to a new country, then you don’t need to delve any deeper. However, if there are specific industry worries, then you should research further to investigate the long-term prospects of the business.
What steps would you recommend to grow the Business?
If an owner is selling for non-financial reasons, then they will usually be more than happy to provide an honest assessment on which methods would be ideal for growth. Nobody knows a business better than their owner, and this simple question can enable you to make a fantastic start with the business. You could potentially save plenty of time and effort in testing and marketing by attaining this information beforehand. Rather than making new mistakes to grow the business, you can instead heed the wisdom of an owner who has already seen it all. As always, it is advisable to conduct your own research on this advice to ensure that it makes sense. Some owners may make false claims of growth if they are in a desperate position to sell.
What are the biggest challenges and obstacles to running this Business?
Undoubtedly, there will be plenty of obstacles for you to overcome whilst running the business, especially in the early months. Not all of these potential hazards will be obvious to you before buying the business. Certain obstacles can include those that involve compliance, new technologies, changing market trends, and new competitors. You may need specific knowledge to successfully run the business, or you may need to purchase certain tools. This will depend on the type of business you are buying, and the industry that it is in. An owner will give you the specific details that you need to be aware of, and you can investigate further on whether you would be able to successfully mitigate them.
How are the business processes documented?
Be sure to find out the business documentation procedures, since this will have an impact on how smooth the transition will be. An efficient process also makes it easier to grow the business, whilst maintaining operational consistency. Be sure to find out how all of the business processes are documented, and whether there is any scope for improvement. It is always easier to take over a business that already has a clear and consistent policy for business process documentation, and a complex business that is lacking in this regard may require more effort than is first realised.
Which skills are most important for running this Business?
The skillset required to run a certain business can often be highly specific. Of course you can always learn on the job, and gain further training, but you must be realistic with whether your current skills lineup with the requirements. The owner will be able to tell you which skills are needed on a day-to-day basis, and which leadership attributes are most pertinent for successfully running the business. We all have a tendency to overestimate our skills, so at this point it is important to be honest with yourself. Do you fit the profile that the owner is describing or will you need further training. Alternatively, you may be able to recruit someone that has the required skills.
Regardless of how enticing an opportunity may seem, it is always important to dig deeper into the details before finalising a purchase. These five questions are your bread and butter; they will give you the ideal starting point to assess whether purchasing this business would be worthwhile for you. They also give you a chance to see whether the business fits in with your long-term expectations and requirements.