Have you ever thought about questions for buying a business?
Purchasing an existing business comes with a whole set of issues that can be completely different from building a new business from the ground up.
If you decide to flex your entrepreneurial muscle by purchasing an existing business, then you need to know what you’re getting into.
And you can begin learning by continuing to read this page.
Here, you’ll learn about some of the essential questions for buying a business, why they matter, and what kind of steps you need to take to ensure that an existing company continues to operate successfully.
The Basics of Buying an Existing Business
Perhaps there’s a small local business with an owner looking to sell and you’re interested in buying.
Maybe you want to manage your own franchise of a regionally or nationally recognized name?
Either way, buying a business and keeping it running isn’t something that is as easy as signing the right papers and handing over the money.
Just like starting a business from a ground up, there are steps to take and a procedure to follow. While no two businesses are alike, some questions are applicable in just about any situation that involves buying a small business.
Among those questions, there is:
- Why is the Current Owner Selling? – This is the first thing to ask, and could be one of the most important.Perhaps the current owner is ready for retirement and selling the business is part of that. It could also be a matter of the business no longer being viable, either because of market conditions, or a new competitor.If that is the case, then purchasing the business may not necessarily be an unwise move, but it would definitely be something that you would want to put more thought into.
- What Does the Business Own? – This is one of those questions for buying a business that will give you some insight into how well the company is doing.When asking this question, you want to look at inventory as well as the equipment used to carry out mission critical processes.If the company has an overabundance of inventory, then there might be a pricing strategy that simply doesn’t work. It could also be a sign that the company’s offerings and its target demographic don’t exactly mix.As far as equipment is concerned, you want to make sure that any potential equipment you would be using as the company’s leader is in reasonable working order and won’t cause any trouble for you right out the gate.
- What Skills Do I Need to Run This Business? – Possessing key leadership characteristics is important, but what else is there?Did the previous owner play a hands-on role in the business, and was that role critical to its operation?If the owner did something that kept the business running and you do not possess that same skill, then you will need to look at hiring someone who can do that job.How does hiring for that task fit into your plans for the business?
- How Well Are the Customers Being Served? – Any discussion on questions for buying a business is going to eventually involve the customers, because they are the ones who keep a company afloat.If the company has a lot of repeat customers, then that is a good sign. If many of the customers that visit a company are new customers, then you want to look at seeing what can be done to retain them and turn them into repeat customers.By looking into this area of the company’s operation, you can see how things like customer service and marketing are being handled and come up with ideas for improvement, if they’re needed.
- What Challenges Will I Face Immediately? – When talking about questions for buying a business, this is one that many entrepreneurs overlook until the sale is final.Before you sign anything, you want to make sure you know what challenges you can expect to face from day one.Think about things like whether or not the building will need improvements, whether or not the company has outstanding bills, and how employees will react to the change in leadership.Having a plan for how you will deal with these issues will allow you to hit the ground running when the change comes.
Building on What Already Exists
Buying into an existing business can be just as involved as starting your own, so you want to establish a strong foundation from the start. By asking the above questions as you begin the process of purchasing a business, you will be well on your way to doing just that. When you ask the right questions about buying a business, there will be less of a chance of you being caught by surprise and creating a headache for yourself. Buyer beware!
Remember, running a business successfully does not need to be complicated. Keep it simple!
For more interesting topics to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.
Manny Skevofilax is a consultant and speaker that helps his clients successfully navigate the challenges of growing their businesses profitably. Since 2003, Manny helps businesses enhance their results by using his experience in strategic planning, financial statement analysis, operations, organizational development, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at manny@portalcfo.com.