Buying a running business is becoming a trend now as people are more interested in buying an established business rather than starting up. With increasing competition, it is becoming difficult to start a new business and make it successful so thats why entrepreneurs are going for established businesses which are already doing great. But before buying a business make sure that you ask these 7 questions to seller which will help in making up your mind whether buying this business is a good idea or not.
Why are you selling this business?
It is important that you know why the seller wants to sell the business as it will have a direct impact on your buying decision. There are so many reasons but if its related to some unresolved issues in business or with lenders or anyone else that might hamper business then you should think twice before going for it. Make sure that you understand sellers perspective on why he/she is interested in selling the business.
How did you arrive at the asking price?
There are a lot of factors that determine in finalising the selling price of the business. You must know what made the seller decide to ask this price. There are various approaches which help in determining the business value so it is better that you also do it on your own as well.
Can you show me business financial statements?
Make sure that you do a proper due diligence before committing anything. After due diligence you will get to know the actual position of business in terms f finance, goodwill, assets, debts, etc. Go through financials carefully and also ask for tax returns so that there will be no issue later on.
Do you have any past or pending lawsuit?
You need to ask the seller whether there were any lawsuits filed against the business or are there any pending left. As you are going to buy this business so you wouldnt want the government to interfere in the business operations right, so find out the reason behind the lawsuit and whether it's resolved or not.
What would you have done differently?
An entrepreneur always has some regrets because they think that they could do something different which may put them in a different situation. They know their business well so if you ask the seller this question then there are chances that you might get good insights which you would use it in future.
Ask for the flow of work in the business?
A seller knows how the operations are going on in the business, who all are involved, etc. If sellers help you understand how everything takes place in the organisation then you will get a proper understanding of what you need to do and with whom to deal with for different tasks.
What do I need to know to run this business?
Besides knowing the parties involved in business there are a lot of other things as well which only the entrepreneur can tell you. He/she will be able to give you the knowledge on what you need to do and what this business requires.
Buying a business is a big task as it involves a lot of investment so dont hurry into it. First, you need to clarify all your doubts and must have a proper knowledge of the business you plan to buy. The above-mentioned questions will simplify your buying decision. If you are having trouble in finding business opportunities then register on BusinessEx.