10 Questions to Ask Before Investing in the USA
There are many crucial details that business buyers should know. Jane Porter, a writer, and contributor for Entrepreneur magazine, interviewed Andy Cagnetta, the CEO and President of Transworld Business Advisors and asked him 10 questions you should ask before buying a business.
Start by asking the seller why they are selling
This will tell you the business conditions and why the seller to put it up for sale. He also encourages you to understand the biggest challenges in the business. Is it money, inventory or something else? The third most important question is whether the seller owes any money. You should ask this question early on even if the seller prefers to discuss financial matters until later in the process.
Another important tip is to understand what role the seller has in the day-to-day operations of the business. This way, the buyer understands what functions need to be replaced after the seller exits the business. You should also ask whether the business has growth potential. Andy says, “find out if they have explored untapped markets or added more products or services to their business model”. Also ask what records the seller will be able to provide you. He also suggests that you ask whether the business has any debt or pending litigation just to avoid unwanted surprises.
How did the seller come up with the price
Sometimes, it is helpful to ask how the seller arrived to the asking price. It is good to know if they felt they’ve invested in the business or they have special needs for a minimum price to sell. Andy says that it is imperative to know any standard operating procedures that are in place. He explains that in family businesses, many operating procedures have been handed down or developed in ways that have gone undocumented. Some businesses’ success is entirely dependent on the owners, and you should make sure to learn how the business can be upheld without the previous owner’s help.
Finally, make sure to step in the seller’s shoes and ask them what they would ask you if the roles were reversed. Andy recommends all of these questions in order to cover all of the aspects of the business. With this information, you can have a clear understanding of the current state of the business and if you want to purchase it.
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