If you are an interested buyer, below is a great resource on questions to ask before you buy a business.
Knowing what information should be included in your offer can make or break the success of any potential purchase so it’s important for both sides, the seller and business broker facilitating transactions between buyers as well as sellers, to have clear understandings beforehand about how they want these deals finalised!
If you want to make sure that your business sale goes smoothly, there are some questions prospective buyers usually ask. These inquiries should be considered while negotiating the purchase of any type of company and can help align goals between buyer and seller, so negotiations proceed efficiently with minimal back-and-forth on each side (which only wastes time).
In the rest of this article below, we include many things potential sellers need answers too in order for them to not waste either party’s time during their due diligence phase.
As a business owner, you should be prepared to answer all types of questions that buyers ask. The common opening inquiries for businesses include:
- Why are you selling?
- How long have owned this company?
- What is good/bad about the business?
- How much time has been invested into products or services?
- What type of customers do you have?
- Do you have SOP’s (Standard Operating Procedures)?
Buyers also often enquire as far as growing their investment by asking general questions not related directly about the business, but others related to partnerships and product.
The Numbers – Do They Add Up?
When a business broker meets with a buyer, they will ask all kinds of questions to find out how much information the owner wants to give them. The more open and honest you can be about your company’s numbers without hiding anything from this person who might end up buying its assets or investing into it as part of an acquisition deal would make things really easy for everyone involved!
What is Your Business Annual Income?
Interested buyers should already know your business’s annual income, especially if they have discussed the sale with a broker. This question can get things rolling about how profitable and successful you are as an entrepreneur – which will help them make their decision on whether or not it is worth investing time into furthering this project by purchasing from you. If due diligence continues past initial meetings, then tax returns and financial statements may come up during those later stages to meet any necessary standards before going forward.
Do You Have Recurring Customers?
Are you looking for a business that has recurring revenue? If so, then this is the perfect opportunity. These types of customers are crucial in valuing your company and ensuring its success because they know what to expect from their service each year while continuing on throughout tough economic times without worrying about price increases or decreased product quality due to changing economies!
What is Your Employee Retention
How many employees do you have and are they the best of breed for your business?
Employees can be a major challenge for new business owners. Knowing how to retain them is helpful in any first year, as retention rates increase profits while aiding with customer service issues that can arise over time due turnover rate or other reasons including poor internal management skills. Poor company management may cause larger problems within an organization, leading buyers wanting more information before making final purchase decisions about buying your business.
Your Role in the Business
Buyers will ask for details about your role in the business.
Buyers want to know about your involvement and responsibilities within the company on a micro and macro level. If it seems like they are very interested, then you can give them more information on what that looks like. This will show them how closely aligned in hopes of running their own businesses is with yours!
The buyer of a business may be curious about who you were when running your company. Here are some questions they might ask:
- How did I function as an owner?
- What was my responsibility in this organization?
- How would you describe your leadership style?
The transition of a business can be difficult and having managers who take care of their employees will make the process easier. The benefits for businesses that have structure are two-fold; Not only do they create value by managing day-to issues or concerns, an incoming owner might face when buying your company but also because buyers know there’s someone on hand with experience working in similar environments before – which means less uncertainty about how things should work out in the future, right from start!
What Makes Your Business Successful?
The best way to be successful is by providing a better service or product. Use these six points as building blocks for your answer:
- Do you offer things that your competitors don’t provide?
- Do staff have specialised skills not found elsewhere in this industry?
- Are profits consistent and ongoing?
- Are you cost more or less than normal?
- Do you own patents or special technology?
- Do you have a website and/or social media networks?
Business Growth Opportunities
Buyers are interested in business growth opportunities.
Many buyers who are interested in your business will ask about how they can grow it. When a potential buyer asks these questions, it is important to know what they want from their new company and have an understanding of the industry as well as any competitors within the same fields.
You may also provide them with recommendations or ideas for things such as expansion opportunities based on current profits/losses achieved through operation rather than before selling so there won’t be anything unexpected.
Asking the right questions is a sure way to get prospective buyers interested in your business.
- What will their future market look like?
- Have you thought about where they see this industry going over 5 -10 years from now?
- What changes need to happen so they can stay competitive and grow the company?
- If the technology within your field has been changing rapidly – how do you factor into all this change?
Your Company History
Buyers are interested in your company’s history, so tell the interested buyers about how you overcame difficult times and what makes you different from other businesses.
- What made you start this business?
- What was difficult when first starting out?
- How did we overcome challenges?
What is the best way for buyers and sellers to work together?
The most successful transactions happen when both parties are interested in making sure that they get what’s best. The common goal of these transactions, which is effective business operations down the line – leads us into an extremely profitable sale of your company!
What questions would you like answered before deciding whether this deal to buy a business could be right for YOU (besides price)? Here at Marc Phillips Business Brokers we shine our knowledge on every side, so ask away!
Questions Buyers Will Have as They Start to Run Your Business
The more you learn about how a buyer thinks and operates, the better positioned your company will be to succeed. Here’s an outline of questions that might come up as they start exploring opportunities:
- What is their background?
- What bridges do we need repair or build between ourselves and them in order for us both make decisions together comfortably on projects?
- Do I share any concerns before moving forward such as our financials; timelines; delivery dates; etc?
Hire a local business broker to help negotiate the sale of your business. While you may think that there are no questions left to answer about selling your business, a professional will be able to help with any remaining concerns.
Hiring an expert makes sure the process goes as smoothly and quickly for everyone involved – which is crucial if they’re looking at many businesses in one area or across different areas of interest, such as specific industries.
Contact Marc Phillips
If you are in the process of searching for a business opportunity in Toowoomba, Brisbane or anywhere in the South East Queensland region, it is important to ask the right questions.
In this post we have highlighted some of the most common queries people have when looking to buy a business.
To get answers from an experienced business broker who can guide you through every step of your search and help find that perfect match, we’d love to connect and answer any questions! Call Marc Phillips today at: +61 455 150 990.
Which Questions Do People Ask Most Often When They are Looking to Buy a Business?