Last week, we had a couple come by our office who were looking at buying their first business. After an introduction to a summary profile document on several businesses, there were a couple that caught their attention.
I suggested that we schedule a meeting with the sellers to get a better understanding of the business. At a meeting like this, several things can get accomplished.
First, it gives the prospective buyer an opportunity to see if they can envision themselves working in the business. Do they like the business? Do they like the products and services it provides? Can they see themselves running the business?
Second, it gives the prospective buyer an opportunity to impress the seller. Especially when there is seller financing involved, the seller will need to feel that the buyer is a right fit and will succeed in the business.
Third, meeting the seller gives the buyer an opportunity to ask a lot of questions about the business, its employees, the competition, the industry, etc.
At this point, the buyers begin to show some apprehension. Upon further discussion, it became apparent that because this was their first time buying a business, they were unsure of what questions they should ask.
I help them come up with the following list of questions to ask the seller:
• Why are you selling this business?
• What do you like the best and least about the business?
• Is there anything about the business that keeps you up at night?
• How long does it take to learn this business?
• What can be done to grow the business in the future?
• What is a typical day like?
• What roles do key employees play?
• Are there any customers that account for any more than 20% of the business?
• Who are the businesses biggest competitors?
• What differentiates you from the competition?
• What qualities should the buyer possess to be successful?
Out of these questions will likely come many others and maybe even more importantly, there will be a level of trust that will begin to emerge. Experience has proven that once a bond of trust is formed, almost any challenges that arise can be resolved.
Finally, the seller is likely to interview the buyer with various questions to see if the buyers are qualified.
Buzz Harris is a licensed business broker with The Liberty Group of Nevada. Email BHarris@TheLibertyGroupofNevada.com.