10 Key Questions Every Business Buyer Must Ask A Seller

Spotting a high potential business in a cutthroat market is like searching for gold beneath the surface. There is no denying that a business acquisition offers measurable benefits, such as loyal clientele, proven marketing, strong goodwill, support and training, and seamless operations. Driven individuals just need to step into the business and drive a steady stream of revenue. However, there’s a catch that can make or break your investment deal.

Choosing a random business opportunity without meticulous research can lead to significant financial losses, missed growth potential, and other serious repercussions for your long term investment. Whether you are planning to buy a retail store or a spa business, make sure you get a clear picture of the business’s financial health, legal aspects, and hidden information before making a final buying decision.

Worry not! We bring you a compiled list of 10 key questions you, as a business buyer, should ask a seller. It can be regarding the purpose of selling, marketing strength, existing employees, lease term, etc. The right approach can help you choose the most rewarding business for sale Brisbane for sustained growth and success.

Let’s Get Started!

1. Why are you selling your business?

It is important to know the real reason for the sale, because owning a failed business operation only leads to financial setbacks and lawsuits later. It is acceptable if the owners are selling their business due to retirement, relocation, or a death in the family. The real challenge comes when they put their business up for sale due to declining sales or become entangled in legal matters.

If the owner tells you they are selling the business for new opportunities or boredom, it's a warning sign, and you must dig for more details. If the reason is boredom, ask them ‘What is it specifically that the business fails to provide? If they are selling to grab new opportunities, you might want to ask ‘Is your new business based on the same model? These questions will give you clarity, helping you make an informed decision.

2. How’s the business performing compared to last year?

This is one of the most common yet overlooked questions when seeking a thriving business for sale Brisbane. Of course, sellers won’t demine their business performance, but it is your responsibility to get the real information out before making a huge investment.

To ensure the business is stable and performing well, you can request to see financial documents, bank statements, and cash flow statements. Also, be ready to ask good follow up questions if you have any doubts regarding the sales and profit margins.

3. Can you break down the revenue and profits for each product and service?

Dig deeper to find out which areas, products, or services contributes most to generating higher returns. Perhaps there are some products that generate the highest revenue but not the profits, or vice versa. In such a scenario, it is essential to know why the company continues to offer these services or products. Also, identify which areas are driven by future growth and long term profits.

4. What’s the Company’s position in the current market?

Buyers tend to opt for the businesses that stand out in the market. It is good to ask the seller about their Unique Selling Proposition and how they are positioned in the competitive market.

As a smart prospect, you should scrutinise products and operational processes on your own to know their actual market presence. If you own an underperforming business, know its future driven approach to generate profits out of it. You can implement the right strategies to boost sales and higher revenue after a successful ownership transition.

5. Is your business staffed with a trained team?

Whether the sale includes existing employees is pivotal to a smooth transition. Ask this question to know more about potential employees and other key aspects when making a final business buying decision. This can give you a sense of security, stability and continuity.

6. Does your company have an established customer base?

There is no denying that businesses with a loyal customer base always generate consistent income after the sale. It further shows that the entity is established within its market and loved by loyal customers. This is an essential ideal for a business with a limited number of active customers. With strong marketing, you can further expand your network and reach wider people for higher profits.

7. Are there any pending lawsuits or compliance violations?

Believe it or not! Asking this question helps potential buyers identify any legal risks associated with the business. Always remember that pending lawsuits or zoning violations can result in hefty penalties, operational disruptions and even damage your reputation in the market.

Make sure you understand these issues ahead of time to make an informed decision before finalising the buying deal.

8. Is your business valued correctly?

An intelligent buyer will definitely ask this question before pouring their hard earned money into any business. Ask the seller to provide detailed proof that ensures the financials they are presenting. Make sure the business is evaluated properly. Ensure the revenue and profits justify the business's selling price. It is essential to assess their tangible and intangible assets before the final investment decision.

9. Does the sale include long term lease?

If the business operates from a particular location, then the lease could become a crucial factor. It is important to have clarity on the lease term, rent, and whether it will be transferred to the new owner. There may be conditions, such as increased deposits and personal guarantees from the seller and the buyer. Having a clear picture on lease can make a world of difference.

10. Can the business be financed?

Again, this question helps business buyers understand whether feasible funding options are available for business acquisition. Some businesses easily qualify for loans, vendor finance and other funding options. Make sure you know this in advance when seeking a profitable business opportunity in Brisbane. This will also give you a leg up on negotiations to seal the deal.

Wrapping Up

Acquiring an existing business is a big investment decision. Thus, it becomes essential to understand the financial health, profit generating products and services, funding options available, market reputation, growth prospects, etc before making the final decision.