Questions to Ask When Buying a Business

Buying a business can be quite a daunting task and one that comes with a multitude of questions. Broken into 4 sections, this article will act as a starting point for potential future business owners.

Why Are You Selling?

There are near infinite reasons for selling a business. It is up to you as a buyer to not only ask the owner, but do further research to uncover any issues that you might be buying into. It could be as simple as someone retiring and wanting to pass on the legacy, but it could also be due to some form of corruption or illegal activity. More often than not, the seller won’t disclose this information to you directly. Therefore, it is your responsibility as a purchaser to do your homework and figure out the history of this organization.

What Is the Target Market?

The first thing to understand when buying a business is making sure you understand the market that this organization operates in. Is it something you are personally passionate about? Does it have room for growth? Is it a stable market that works around essential items or is a commodity that can be easily effected by economic downturn? Now more than ever you want to consider how the business could perform in a less than ideal business environment.

Does the Company Carry Any Current Debt?

This point goes along with the “Why Are You Selling?” section. It’s critical to understand what you are getting yourself into. When you think about buying a business, acknowledge that you get more than just the brand, building, and titles. Sit down with the owner and go over what assets and liabilities will be passed along to you if the decision to purchase is finalized. You will want a clearly listed inventory of all the items involved in the deal.

What Is/Was Your Current Plan For Growth?

At this point, you will want to gain further insight into how the business operates. What are the current marketing plans and day-to-day operations of the organization? What are the company’s main revenue streams? Again, this section can be easily related to the target market description I mentioned previously. Before jumping in to the deep end, you will want to gain a deep understanding of the overall plans of the business and how you can build or restructure them.


Written by Zachary Balla, Pennsylvania SBDC Lead Office Marketing Team

Zachary Balla is a graduate assistant at the PA SBDC and current MBA student at Kutztown University. He is from Exeter, Pennsylvania and enjoys reading and playing the piano in his free time.