There are a lot of questions that you may be asking yourself when looking to buy a business, and as such there are a few questions that you should ask of the existing business owner before you sign the dotted line. Read our guide the top 5 questions that you should ask so that you can feel confident with your new investment.
1: Why is the owner selling the business?
Feel free to ask the current owner why they’re selling. I’ve found that there’s usually always got to be a reason that new buyers feel comfortable with, so that they’re happy to buy the business from the current owner. If the reason doesn’t sit right with you, then engage them in conversation a little further to find out potential downfalls you may face if you were to purchase the business.
2: How much rent are they paying?
How long is the rental agreement for, and how often is it paid? If you can find out just how much the rent will set you back, you’ll be able to determine one of the biggest outgoings for your business
3: What is the current profit of the business?
Find out how much gross turnover there is. Ask how much profit they would make from the business and their return on investment, so that you can forecast your incomings.
4: How long is left on the lease? Is there any equipment leased?
Definitely ask about the lease. This is especially important if you need to borrow to purchase the business.
5: Ask to see the due diligence documents
You should definitely ask to see the BAS statements, the lease and the franchise agreement if it’s a franchise. These things are required to complete due diligence, and they’ll help you feel comfortable with the figures, so that you can buy the business with confidence. Don’t be afraid to ask for them!
Ask yourself, does the future of the business and the industry look bright? Can you see yourself here?
So there you have it, the five most important questions that prospective buyers need to ask when looking to buy a business. For more information on buying a business, talk to one of our professional brokers to get their expert advice.
What does a Business Broker do exactly?
A Business Broker gives you access to businesses up for sale that you may not be able to find on your own. Our business brokers can confidentially sharpen your search for you to find businesses that fit your criteria, saving you precious time.
We aim to find a business that is right for you, so think about what your perfect business is and why, and we’ll find you your new investment to make your business dream a reality.