Buying a business? There's a multitude of questions which you first need to ask yourself and then ask both a valuer and your accountant.
Remember, while on the surface the business can look great, consider things from the seller’s perspective. Some questions buyers should ask might include:
- Why is the current owner selling?
- How long has the business been established?
- How long has the current owner owned the business for?
- How long is remaining on the lease of the premises?
- What is the size of its customer base and how many are repeat customers?
- Are there any existing contracts in place?
- What percentage of customers make up the majority of its' sales?
- Is business seasonal?
- What is its current marketing budget?
- How is its relationship with suppliers?
- How has its asking price been calculated and is the owner paying themselves a wage?
- Have you looked at the owners business plan and what is the situation with any staff and contacts.
The list goes on and on, but there is always help at hand if you use a solicitor, CPA, Chartered Accountant or professional business valuer, all of whom deal with the ins and outs of business acquisitions each and every day.
So, before you take the leap, due diligence are the two words you need to keep front and centre. There's never any guarantees when it comes to building a successful business - but at least you can do your best to ensure you're not buying a lemon.