You have decided that you wanted to buy a business but do not know what questions to ask or what you are looking for. Here is a partial list of questions that may be helpful when you start to look for a business:
- is this a seasonal business?
- how large is the largest customer?
- what per cent of sales do the top 10 customers make?
- is there any economic dependence on any one or two customers?
- how many suppliers are there?
- is there economic dependence on a supplier?
- are their other companies who can supply the same or similar product?
- what are the hours of operation?
- how involved are the owner of the business?
- how knowledgeable are the staff?
- how long has the staff worked in the company?
- what is the potential cost of severance if you were to terminate an existing employee?
- is this an incorporated or unincorporated business?
- what is the owner selling – shares or assets?
- is the company’s tax filings up to date?
- is the internal accounting records up to date and computerized or manual accounting?
- when was the last time that the company was audited by the tax authorities?
- review the last tax returns of the company
- review the notice of assessment and reassessments
- are there any potential lawsuits?
- how old is the equipment?
- is the equipment in good shape?
- does it need to be replaced?
- how long is the lease?
- is the lease transferable?
- can the business be relocated?
- is there enough space to grow the business?
- does the business have high staff turnover?
These are a few items that you can ask when looking for a business.