Reasonable Questions to Ask Before Buying a Business

Reasonable Questions to Ask Before Buying a Business 

Reasonable Questions to Ask Before Buying a Business - these could be inform of buying a small business checklist, questions ask buying existing business, due diligence questions when buying a business, things to consider when buying a business, questions to ask when buying a restaurant, hair salon, agric-farm, a bakery, a manufacturing outfit etc. These will let you know what to look for in financial statements when buying a business.

In fact, one big business idea is to buy an existing business. Therefore, you must decide whether or not to buy a business knowing very well that such decision must be a business idea not for a fun. 

The next step is to put in place all necessary procedures required to consummate the dealing. Such necessary procedure must include due diligence exercises which starts from series of question about the business.

If you can not buy an existing business, then you must start one afresh, from the scratch.

These two aspects of decision require you to ask a lot of questions to be able to carry on wisely.

Reasonable Questions to Ask Before Buying a Business

Reasonable Questions to Ask Before Buying a Business 

1. Should I buy or start mine afresh?

There are lots of reasons why you might want to buy a business rather than starting your own. An old business has goodwill, has started operation, built capacity for a long time. Then, is this what you need. If it does not fit into what you need, can you start a new one. This means having patience, nursing it to growth.

2. What is the location of the business?

In certain business like in the hospitality industry, location is a major asset. The same thing is applicable to real estate businesses. Location could have effect on overall and unit cost of production ( the demand and supply side of the value chain) of the business.

3. How can I make money out of this business?

Ask yourself this question while making calculations before you start negotiating, and then you will continue asking yourself this question all the way through the process, as things change.

If you can't make money from this business, considering price, income, overhead, and financing, then you may have to walk away from the deal. 

4. What business consultant do I go for?

You may need the services of a broker for stock evaluations, Chartered accountant for financial and taxation advisory services, and a lawyer for legal documentations. Do not make the mistake of giving the accounting and taxation aspect of this valuation to a lawyer or stoke broker. Let each professional handle his/her professional aspect only.

Reasonable Questions to Ask Before Buying a Business 

5 Do I Know what I am buying?

In some cases one may not be buying the entire business. He should understand this. The negotiation may end up in his buying only the fixed asset, equipment, work-in-progress, business name or only certain information.

All these components of the business should have their separate valuations. This situation is a tricky one because one can easily over value what he is buying . You may also buy the entire business , including liabilities, like payroll tax liabilities, loans payable, taxes payable, mortgages payable, liens, and unpaid debts and pending judgements.

Know also that the type of business, Limited liability company, Public limited liability company, company limited by guarantee etc all determine the value of what you are buying. 

The relevant professionals involved should be able to let you know what you are buying.

6. What is the value of the business?
You have to do your valuation exercises properly during the due diligence exercise. This will determine whether you are paying so much or not. Remember what you are buying.

Reasonable Questions to Ask Before Buying a Business 

7. Would I be able to finance the business? 
There are various ways of funding a business. If you don’t have enough savings, you have to look for partners, investors, or go for business loan.

It could be that after all these questions and answers you have will make a move to acquire a business. Click here to get in touch with us.

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