Latest Questions in Buying A Business

Hitesh Mohanlal answered a question

What pitfalls or issues did you look for if you bought your company?

Speaking to the owners out there, did you buy your business? If so what were some of the primary concerns you had, or issues you looked when choosing your company?

Hitesh Mohanlal

Hitesh Mohanlal, Director at WOW! Advisors & Business Accountants

Very good question. Generally, the first question I always ask my clients who come to me about purchasing a business is 'how much does the business rely on the ... read more

Very good question. Generally, the first question I always ask my clients who come to me about purchasing a business is

'how much does the business rely on the person who is selling?'

If a lot (ie all the sales go through the existing owner or customers like to talk to them and them alone) then the business relies on the owner. If you then purchase this business there is a risk that customers will not wish to transact with you because the relationship has changed.

The second question I ask is

'How good are the systems or procedures that run the business'

For example if all the know how is in the head of Norris and Norris is 72 years old and about to retire when you go in it is going to take you a long time to run the business. If on the other hand they have a systems or procedure manual it makes life easier.

Melissa Profeta

Melissa Profeta, Community Manager at SavvySME

Great insights, Hitesh! Are these the only questions you normally ask to help the customer decide or are there factors that you'd consider first before asking t... read more
Great insights, Hitesh! Are these the only questions you normally ask to help the customer decide or are there factors that you'd consider first before asking these questions?
Yee Trinh

Yee Trinh, Cofounder at SavvySME

Agree. You want to be purchasing somewhat a self-sustaining engine. Systems and structure as opposed to a business that's reliant on people.... read more
Agree. You want to be purchasing somewhat a self-sustaining engine. Systems and structure as opposed to a business that's reliant on people.
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Deborah Vella

Deborah Vella, Owner at Support Legal

I didn't buy my business but I support others who chose to. It is essential to ensure that the main foundations of the business are strong. After that, goodwi... read more

I didn't buy my business but I support others who chose to. It is essential to ensure that the main foundations of the business are strong. After that, goodwill and great relationships with clients and customers are a big consideration.

Yee Trinh

Yee Trinh, Cofounder at SavvySME

Thanks for answering Deborah! What do you mean main foundations?... read more
Thanks for answering Deborah! What do you mean main foundations?
Deborah Vella

Deborah Vella, Owner at Support Legal

From a legal perspective, strong foundations would be things like a good asset structure, good employment agreements and a good lease agreement for a premises. ... read more
From a legal perspective, strong foundations would be things like a good asset structure, good employment agreements and a good lease agreement for a premises. From the financial perspective, it would include a good credit history and good payment relationships with suppliers. The foundations change depending on the perspective that you look at. If there are some weak foundations, they can impact a business in the future unless corrected. For example, a business with poor payment relationships with suppliers, will probably have weaker relationships with those suppliers which may put the ability to deliver your own products and services at risk.
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