Inc's 10 Questions to ask before Buying a Business

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May 26, 2011 by Michael Davidson

I just read an interesting Article from Inc., entitled 10 Questions to ask before Buying a Business.
Many experts are predicting that a huge wave of businesses will become available over the next decade or so as baby boomers look to sell. As the economy continues its climb into a full-blown recovery (we hope), it just might be the perfect time for you to fulfill that lifelong dream of buying a business.

If you can find the right business that is the right fit for you, I think this is a great time to buy!

Overall, I think it's a pretty good list.  When we create a Confidential Business Review (CBR), we try to address these questions up front before you even meet with the owner.

Some of the questions not asked by Inc., which we think are important include:

  1. Can you as a new owner successfully run and operate this business? If not, the other questions don't really matter.

  2. What do you bring to the table? Ideally, we want people who bring more to the table then the owner.  You don't have to duplicate their strengths but you do need to have strengths that are applicable to owing the subject business.  These tend to be the true success stories.

  3. What are the challenges facing the company? Odds are good that this is why the owner wants to sell.  If your not the solution, your probably better off letting someone else take over the company.

  4. Do you have a business plan? Most SBA Lenders require a new owner to have a business plan, for good reason.  People with plans generally outperform those who don't.  Furthermore, if you know what your doing, creating a plan is easy.  If you don't, you better get help or start questioning the value your really bring to the table outside of your life savings!

  5. Are you an Entrepreneur? Only about 2% of the population own a business, making them a rare breed.   Most of them feel like they have to own a business regarding of ROI, wealth or "prestige".  On the flip side, if your not an Entrepreneur, you might find out the hard way that owning a business is a lot harder and demanding then you imagined.

There is a saying in our firm.  Matching the right buyer with the right business is how we define success.  We hope that all buyers, whether they use a broker or not, take this advice to heart!

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