Buy · 6 min read
Questions to ask before buying a business
Use these questions to clarify your budget, investigate the opportunity and decide where professional due diligence is needed.
A business can look attractive and still be a poor fit for your budget, experience or goals. Good buying decisions begin with a clear brief, then move into evidence-based due diligence before any commitment is made.
Define what you can responsibly afford
Think beyond the advertised price. Allow for working capital, professional advice, finance costs, stock, equipment repairs and the cash needed while you learn the operation. Consider how much income you need the business to produce for you personally.
Understand why the business is being sold
The seller's reason is not automatically a warning sign, but it helps frame the investigation. Compare the explanation with the financial performance, customer activity, staffing position and required owner involvement.
Investigate the evidence behind the earnings
- How much revenue depends on a small number of customers?
- Are sales stable, seasonal, growing or declining?
- Which expenses are essential and which are owner-specific?
- What maintenance, stock or staffing costs are likely after settlement?
- Do the bank, tax and accounting records support the reported figures?
Check whether the business suits you
Ask what the owner actually does each week, what skills the team provides and what hours or travel are required. A financially sound business may still be the wrong purchase if it does not match your capability, location or preferred lifestyle.
Use BizEX to clarify your buying brief and organise the questions. Obtain appropriate accounting, legal and financial advice before relying on seller information or entering a transaction.
General information only. Consider obtaining advice suited to your circumstances before making a business, legal, tax or financial decision.