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February 27, 2024

49 Questions To Ask When Buying A Business: Gauging Readiness

Prepare for a successful business purchase with our 49 questions to ask when buying a business that will empower you to make informed decisions.

49 Questions To Ask When Buying A Business: Gauging Readiness

Whether acquiring a SaaS or brick and mortar company, one of the most critical (and first) steps is collecting the right questions to ask when buying a business. This process is not just for the purpose of finding a viable enterprise. By knowing what to ask when buying a business, you’re ensuring that your investment aligns with your goals and expectations. 

As you stand on the threshold of making one of the most significant decisions of your professional life, the importance of knowing what to ask for when buying a business can’t be overstated (especially in negotiations). That’s why in this article, we’ll detail 49 questions to ask when buying a business, so that you go into your search with eyes wide open. Get ready to peel back the layers and discover the true essence of the business you're considering.

Questions About History to Ask When Purchasing a Business

Understanding the history of a business is pivotal to grasp its trajectory and resilience. Here are some crucial questions to ask before buying a business to get a clear picture of its background:

1. How long has the business been operational? 

2. What have been the major milestones and setbacks?

3. Can you provide a history of the company's ownership? 

4. How has the business evolved over time?

5. Are there any past legal or financial issues to be aware of?

6. What were the strategic reasons behind major historical decisions, such as expansions or contractions?

7. Can you detail any past instances of the business’ resilience in challenging economic times?

Questions to Ask About Financial Health 

The financial health of a business is a cornerstone of its overall viability. Below are some key questions to ask when purchasing a business that centered around its financials:

8. What is the justification for the current asking price

9. How does this price compare to similar businesses in the market?

10. What valuation methods were used? 

11. What are the current revenue and profit margins?

12. Are there any current debts or liabilities? 

13. What are the forecasts for future financial performance?

14. How diversified is the revenue stream? 

Questions to Ask When Evaluating a Business About Market Position and Competition

Understanding a business's market position and its competitive landscape is crucial to know before you buy it. These questions to ask when buying a business will provide insights into its standing in the industry:

15. What are the biggest challenges the business currently faces? 

16. How does the business fare against its competitors?

17. Are there emerging trends that could impact the business? 

18. What are the potential growth opportunities? 

19. What is the customer retention rate? 

20. Can you provide examples of how the business has successfully adapted to industry shifts in the past?

Questions to Ask About Operations and Logistics

What’s the lifeline of a business? Its daily operations and logistics. Here are some questions to ask when buying a business to understand its operational health:

21. What is the company culture like? 

22. Who are the key employees and their roles?

23. How is the day-to-day operation managed?

24. What technology and systems are in place?

25. What are the main channels of revenue? 

26. How does the business handle customer service? 

27. Are there any known vulnerabilities in the supply chain or logistical processes that need addressing?

28. What operational efficiencies have been implemented in the last few years, and what were the outcomes?

Questions to Ask About Customer and Supplier Relationships

In knowing what to ask when buying a business, remember to evaluate the strength and stability of customer and supplier relationships. They’re often the backbone of a business's success, so ask this:

29. Who are the major customers and suppliers of the business? 

30. How long have the key customer and supplier relationships been maintained? 

31. Are there any exclusive or preferential deals with customers or suppliers? 

32. What are the terms and conditions of major supplier contracts? 

33. How dependent is the business on its largest customer or supplier? 

34. What strategies has the business employed to manage and enhance key customer relationships?

Legal and Contractual Questions to Ask Before Buying a Business

Due diligence around existing and pending contracts is a non-negotiable aspect of business acquisition. Here are the questions to ask when buying a business to navigate the legal landscape:

35. Are there any ongoing contractual obligations?

36. What are the terms of existing leases or agreements? 

37. Are there any pending lawsuits or legal disputes? 

38. How transferable are the business contracts? 

39. Are there any non-compete clauses? 

Questions to Ask During Acquisition About Compliance and Regulations

When it comes to knowing what to look at when buying a business, make sure you grasp its regulatory landscape and compliance requirements. Doing so mitigates risks and ensures smooth operations:

40. What industry-specific regulations does the business need to comply with? 

41. Are there any ongoing compliance or regulatory issues?

42. How does the business manage data protection and privacy? 

43. Has the business ever failed a compliance audit or been fined?

44. What are the procedures for maintaining compliance with industry standards? 

45. How does the business stay ahead of regulatory changes, and what impact have recent changes had?

Questions to Ask About Personal Fit and Future Plans

Before making an acquisition, reflect on how well the business aligns with your personal and professional aspirations. Consider these related questions to ask when buying a business about the transition ahead:

46. Why am I interested in this particular business? 

47. Does this business align with my personal and professional goals? 

48. What are my plans for growing the business? 

49. Am I prepared for the challenges of business ownership?

Knowing What to Ask When Buying a Business

Acquiring a company demands foresight and wisdom of knowing what to ask when buying a business. This guide of carefully curated questions is designed to empower you with knowledge to make informed decisions aligned with your financial and personal goals.

If you need help, Boopos stands as a beacon of support and expertise. By working with us, you gain a partner who is as invested in your success as you are. We have extensive experience working with online businesses, with a focus on subscription-based businesses in particular. Our advisory services, valuation tools, and understanding of business acquisition position us uniquely to guide you through this complex process.

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