5 People You Should Talk to When Buying a Business
When you're shopping for a business, there are a lot of important questions to ask. But just as important as what to ask is who you ask. You can't just rely on the motivated seller (aka business owner). Below are five key people you need to talk to before signing on the dotted line.
1. The Business Owner
While it's obvious that you should talk to the business owner, you may have overlooked important questions. Outside from the obvious questions, ask the owner what it's really like to own the business.
- What does a normal day look like?
- Are your employees dependent or empowered to make decisions?
- Who are your best customers and why?
It's also a good idea to find out why the owner is selling the business. The best possible answer to this question is simply retirement. However, if the owner can't explain why he's selling, it may be a red flag.
2. The Accountant
If the business has an accountant, make sure to set up a meeting. Many local businesses, especially restaurants, may under report their cash receipt revenues to avoid paying sales tax. Unfortunately, if the state decides to audit the business after you've purchased it, you can be on the line for any unpaid sales tax, which could be thousands of dollars. Also, make note of areas where the business may be gaining or losing money.
3. The Employees
Employees are always in the know. Not only should you talk about the business with the owner, you should also meet with the current employees. Listening to and acting on employee suggestions can really benefit the new business owner. It can establish a foundation of mutual respect and goodwill, especially if you plan to keep the same employees.
4. The Customers
Talk to several customers and find out what they like and don't like about the current business. Ask for ways that the business can improve its offerings. A few sample questions to ask:
- What can the business do better?
- What is the business's reputation in this area?
- What is one service/item/product/offering you would like to see included?
5. The Suppliers
Last, but certainly not least, you should talk with the business's suppliers. It's important to make sure that you can continue the same contracts or deals as the previous owner. Some suppliers may be unwilling to keep the same agreement, and you should know that before you buy.
| 
No comments:
Post a Comment