When I am asked to help a buyer who is looking at buying a business, the meeting is usually me asking a long series of questions. Many of the questions end up being questions which the buyer should be asking the seller in relation to the business and their reason for selling.
At the end of the meeting with the buyer, they will often say “Thank you, now I know what I need to know and what questions I should ask”. Then I sit and wonder why they hadn’t thought of these seemingly obvious questions before. But of course, if you haven’t been through the process of buying a business before – then you don’t necessarily know what you need to know!
It’s all about asking the right questions to get the right information to be able to make the right decision FOR YOU! The trick is knowing what information you need!
There are some basic areas that you need to explore as a potential buyer and therefore areas as a seller which you need to have covered. These are;
(1) Why is the seller selling? (Especially when they are telling you what an excellent business it is.)
(2) Financial aspects of the business. The seller should be able to provide you with ‘year to date’ figures and finalised accounts to the end of the last financial year. If they can’t why not?
(3) How much should I spend on a business? It’s not just about price but also working capital etc.
(4) Non financial aspects of the business. Just a few of the things are lease arrangements, staffing, systems, barriers to entry, seller hand over period, seller not competing… and many more,.
(5) Questions to ask yourself. Why do I want to own a business and why this one? Just for starters.
If you are thinking of buying a business then plan and prepare before you even start looking.
Buying a business is a major decision for most people. Unlike buying a home, where if you end up not liking it you can always sell it again and get something for your money. If you buy a business and it all goes pear shaped, you could end up with nothing to sell and lose everything – including your home! Don’t take the chance! Seek good advice before proceeding – CLICK HERE.
Having said all that, if you buy the right business for you and for all the right reasons it could be the best investment you ever made!
All the best in your decision making – John Denton (See Upcoming Events – For More Opportunities to Learn)
Upcoming Events – This is where I recommend upcoming events which I believe are well worth attending if you are in business or thinking of getting in to business. They may be my events or events by people I know and trust to do an excellent job.
June 7th – “Buying and Selling Businesses” at the Small Business Centre – Stirling. Half a day and I am the presenter.
May 5th – Mal Emery’s “From Frustration To Freedom” workshop – Your Choice between Financial Freedom or Slavery in the Chaotic New Economy”. Hands on 1 day workshop . Mal will make this FREE for you as you are my special guest. That saves you $297 (single) or $594 (double).
May 23rd – Sue Papadoulis, who is an expert in gaining free publicity for your business, is speaking on “Publicity For Profit” at the Wanneroo Business Association breakfast meeting. Sue has addressed my mentoring groups on two occasions and is terrific value!